Peter Voggenthaler v. Maryland Square LLC

FOR PUBLICATION

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

PETER J. VOGGENTHALER; WILLIAM No. 10-17520
MONTERO; BARBARA MONTERO;
CLIFFORD ROGERS; SHARON D.C. No.
ROGERS; HERMANN ROSNER; 2:08-cv-01618-
MARCUS ROTHKRANZ; DANIEL RCJ-GWF
SOLDINI; CHARLES WALKER; VERNA
WALKER; JACK YENCHECK; OFELIA
YENCHECK; RICHARD MALM; ROGER
ELLSWORTH; JO ANN ELLSWORTH;
MARGARET RUDELICH-HOPPE;
PATRICIA MAHONEY; RICHARD
FALEN; PETER LEARNED; KRISTIAN
MEIER; ELIZA ACOSTA; MIRHA
ELIAS; AIKO BERGE; VICTOR
BECERRA; ARTHUR BODENDORFER;
BRENDA C. CHAFFIN; MICHAEL J.
SOLMI; JASON COWLES; JANE
GAUTHIER; HONORE GAUTHIER;
NIKOLAS KONSTANTINOU; DRAGAN
KURAJICA; KENNETH LOWTHER;
JAMES LUEHMANN; JACQUELINE
LUEHMANN; RUTH MANNHEIMER;
STATE OF NEVADA, on behalf of
Department of Conservation &
Natural Resources, Division of
Environmental Protection,
Plaintiffs-Appellees,

v.
2 VOGGENTHALER V. MARYLAND SQUARE

Maryland Square LLC,
Defendant-Appellant,

and

MARYLAND SQUARE SHOPPING
CENTER LLC; HERMAN KISHNER
TRUST, DBA Maryland Square
Shopping Center; IRWIN KISHNER;
JERRY ENGEL; BANK OF AMERICA,
NA, Trustee on behalf of Herman
Kishner Trust; CLARK COUNTY
SCHOOL DISTRICT; MELVIN
SHAPIRO; SHAPIRO BROTHERS
INVESTMENT COMPANY,
Defendants.

PETER J. VOGGENTHALER; WILLIAM No. 11-15174
MONTERO; BARBARA MONTERO;
CLIFFORD ROGERS; SHARON D.C. Nos.
ROGERS; HERMANN ROSNER; 2:08-cv-01618-
MARCUS ROTHKRANZ; DANIEL RCJ-GWF
SOLDINI; CHARLES WALKER; VERNA 3:09-cv-00231-
WALKER; JACK YENCHECK; OFELIA RCJ-GWF
YENCHECK; RICHARD MALM; ROGER
ELLSWORTH; JO ANN ELLSWORTH;
MARGARET RUDELICH-HOPPE;
PATRICIA MAHONEY; RICHARD
FALEN; PETER LEARNED; KRISTIAN
MEIER; ELIZA ACOSTA; MIRHA
ELIAS; AIKO BERGE; VICTOR
BECERRA; ARTHUR BODENDORFER;
 VOGGENTHALER V. MARYLAND SQUARE 3

BRENDA C. CHAFFIN; MICHAEL J.
SOLMI; JASON COWLES; JANE
GAUTHIER; HONORE GAUTHIER;
NIKOLAS KONSTANTINOU; DRAGAN
KURAJICA; KENNETH LOWTHER;
JAMES LUEHMANN; JACQUELINE
LUEHMANN; RUTH MANNHEIMER,
Plaintiffs-Appellees,

MARYLAND SQUARE SHOPPING
CENTER LLC, Trustee on behalf of
Herman Kishner Trust,
Defendant-Intervenor,

STATE OF NEVADA, on behalf of
Department of Conservation &
Natural Resources, Division of
Environmental Protection,
Plaintiff-Intervenor,

BANK OF AMERICA, NA, Trustee on
behalf of Herman Kishner Trust;
JERRY ENGEL, Trustee on behalf of
Herman Kishner Trust; HERMAN
KISHNER TRUST, Trustee on behalf
of Herman Kishner Trust, DBA
Maryland Square Shopping Center;
IRWIN KISHNER, Trustee on behalf of
Herman Kishner Trust,
Defendants-Intervenors,

v.
4 VOGGENTHALER V. MARYLAND SQUARE

SHAPIRO BROTHERS INVESTMENT
COMPANY,
Defendant-Appellant,

and

CLARK COUNTY SCHOOL DISTRICT;
MELVIN SHAPIRO; MARYLAND
SQUARE LLC, Trustee on behalf of
Herman Kishner Trust,
Defendants.

PETER J. VOGGENTHALER; WILLIAM No. 11-15176
MONTERO; BARBARA MONTERO;
CLIFFORD ROGERS; SHARON D.C. Nos.
ROGERS; HERMANN ROSNER; 2:08-cv-01618-
MARCUS ROTHKRANZ; DANIEL RCJ-GWF
SOLDINI; CHARLES WALKER; VERNA 3:09-cv-00231-
WALKER; JACK YENCHECK; OFELIA RCJ-GWF
YENCHECK; RICHARD MALM; ROGER
ELLSWORTH; JO ANN ELLSWORTH;
MARGARET RUDELICH-HOPPE;
PATRICIA MAHONEY; RICHARD
FALEN; PETER LEARNED; KRISTIAN
MEIER; ELIZA ACOSTA; MIRHA
ELIAS; AIKO BERGE; VICTOR
BECERRA; ARTHUR BODENDORFER;
BRENDA C. CHAFFIN; MICHAEL J.
SOLMI; JASON COWLES; JANE
GAUTHIER; HONORE GAUTHIER;
NIKOLAS KONSTANTINOU; DRAGAN
KURAJICA; KENNETH LOWTHER;
 VOGGENTHALER V. MARYLAND SQUARE 5

JAMES LUEHMANN; JACQUELINE
LUEHMANN; RUTH MANNHEIMER;
STATE OF NEVADA, on behalf of
Department of Conservation &
Natural Resources, Division of
Environmental Protection,
Plaintiffs,

v.

MARYLAND SQUARE SHOPPING
CENTER LLC; HERMAN KISHNER
TRUST, DBA Maryland Square
Shopping Center; IRWIN KISHNER;
JERRY ENGEL; BANK OF AMERICA,
Trustee on behalf of Herman
Kishner Trust,
Defendants-Appellees,

v.

MELVIN SHAPIRO; SHAPIRO
BROTHERS INVESTMENT COMPANY,
Defendants-Appellants,

and

MARYLAND SQUARE LLC; CLARK
COUNTY SCHOOL DISTRICT,
Defendants.
6 VOGGENTHALER V. MARYLAND SQUARE

PETER J. VOGGENTHALER; WILLIAM No. 12-16409
MONTERO; BARBARA MONTERO;
CLIFFORD ROGERS; SHARON D.C. Nos.
ROGERS; HERMANN ROSNER; 2:08-cv-01618-
MARCUS ROTHKRANZ; DANIEL RCJ-GWF
SOLDINI; CHARLES WALKER; VERNA 3:09-cv-00231-
WALKER; JACK YENCHECK; OFELIA RCJ-GWF
YENCHECK; RICHARD MALM; ROGER
ELLSWORTH; JO ANN ELLSWORTH;
MARGARET RUDELICH-HOPPE;
PATRICIA MAHONEY; RICHARD
FALEN; PETER LEARNED; KRISTIAN
MEIER; ELIZA ACOSTA; MIRHA
ELIAS; AIKO BERGE; VICTOR
BECERRA; ARTHUR BODENDORFER;
BRENDA C. CHAFFIN; MICHAEL J.
SOLMI; JASON COWLES; JANE
GAUTHIER; HONORE GAUTHIER;
NIKOLAS KONSTANTINOU; DRAGAN
KURAJICA; KENNETH LOWTHER;
JAMES LUEHMANN; JACQUELINE
LUEHMANN; RUTH MANNHEIMER,
Plaintiffs,

and

STATE OF NEVADA, on behalf of
Department of Conservation &
Natural Resources, Division of
Environmental Protection,
Plaintiff-Appellee,

v.
 VOGGENTHALER V. MARYLAND SQUARE 7

MARYLAND SQUARE LLC;
MARYLAND SQUARE SHOPPING
CENTER LLC; HERMAN KISHNER
TRUST, DBA Maryland Square
Shopping Center; IRWIN KISHNER;
JERRY ENGEL; BANK OF AMERICA,
NA, Trustee on behalf of Herman
Kishner Trust; CLARK COUNTY
SCHOOL DISTRICT; MELVIN
SHAPIRO,
Defendants,

and

SHAPIRO BROTHERS INVESTMENT
COMPANY,
Defendant-Appellant.

PETER J. VOGGENTHALER; WILLIAM No. 12-16412
MONTERO; BARBARA MONTERO;
CLIFFORD ROGERS; SHARON D.C. No.
ROGERS; HERMANN ROSNER; 2:08-cv-01618-
MARCUS ROTHKRANZ; DANIEL RCJ-GWF
SOLDINI; CHARLES WALKER; VERNA
WALKER; JACK YENCHECK; OFELIA
YENCHECK; RICHARD MALM; ROGER OPINION
ELLSWORTH; JO ANN ELLSWORTH;
MARGARET RUDELICH-HOPPE;
PATRICIA MAHONEY; RICHARD
FALEN; PETER LEARNED; KRISTIAN
MEIER; ELIZA ACOSTA; MIRHA
ELIAS; AIKO BERGE; VICTOR
8 VOGGENTHALER V. MARYLAND SQUARE

BECERRA; ARTHUR BODENDORFER;
BRENDA C. CHAFFIN; MICHAEL J.
SOLMI; JASON COWLES; JANE
GAUTHIER; HONORE GAUTHIER;
NIKOLAS KONSTANTINOU; DRAGAN
KURAJICA; KENNETH LOWTHER;
JAMES LUEHMANN; JACQUELINE
LUEHMANN; RUTH MANNHEIMER,
Plaintiffs,

and

STATE OF NEVADA, on behalf of
Department of Conservation &
Natural Resources, Division of
Environmental Protection,
Plaintiff-Appellee,

v.

MARYLAND SQUARE LLC,
Defendant-Appellant,

and

MARYLAND SQUARE SHOPPING
CENTER LLC; HERMAN KISHNER
TRUST, DBA Maryland Square
Shopping Center; IRWIN KISHNER;
JERRY ENGEL; BANK OF AMERICA,
NA, Trustee on behalf of Herman
Kishner Trust; CLARK COUNTY
SCHOOL DISTRICT; MELVIN
 VOGGENTHALER V. MARYLAND SQUARE 9

SHAPIRO; SHAPIRO BROTHERS
INVESTMENT COMPANY,
Defendants.

Appeal from the United States District Court
for the District of Nevada
Robert Clive Jones, Chief District Judge, Presiding

Argued and Submitted
April 17, 2013—San Francisco, California

Filed July 26, 2013

Before: Mary M. Schroeder, Sidney R. Thomas,
and Barry G. Silverman, Circuit Judges.

Opinion by Judge Schroeder

SUMMARY*

Environmental Law

The panel affirmed in part and reversed in part the district
court’s judgments in litigation under the Comprehensive
Environmental Response, Compensation, and Liability Act
and the Resource Conservation and Recovery Act concerning

*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
10 VOGGENTHALER V. MARYLAND SQUARE

seepage of a toxic dry cleaning chemical into the ground
under a Las Vegas shopping center.

The district court granted summary judgment in favor of
neighboring homeowners who sought injunctive relief against
the property owners of the shopping center and operators of
the dry cleaning facility. The district court also granted
summary judgment in favor of the Nevada Division of
Environmental Protection, which sought to recover its
cleanup costs. The panel largely affirmed the district court’s
judgments. It affirmed the district court’s rejection of the
contention that application of CERCLA to soil and
groundwater contamination that occurred solely in Nevada
violated the Commerce Clause.

The panel vacated the grant of summary judgment under
CERCLA against the current owner and remanded so that the
owner might have an opportunity to make the additional
showing that would be necessary to establish that it met an
exception to CERCLA liability for bona fide prospective
purchasers. The panel reversed on procedural grounds the
grant of summary judgment under RCRA against the current
owner and the operators because those defendants did not
have an adequate opportunity to respond to plaintiffs’ claims.
The panel reversed the grant of summary judgment against a
guarantor because there was no evidence of spills during the
term of his guaranty.
 VOGGENTHALER V. MARYLAND SQUARE 11

COUNSEL

Alexander Robertson, IV and Jennifer L. Taylor, Robertson
& Associates, LLP, Las Vegas, Nevada; Jan Adam Greben,
Greben & Associates, Santa Barbara, California, for
Plaintiffs-Appellees Peter J. Voggenthaler, et al.

Catherine Cortez Masto, Attorney General, Carolyn E.
Tanner (argued), Senior Deputy Attorney General, and
Jasmine K. Mehta (argued), Deputy Attorney General, Carson
City, Nevada, for Plaintiff-Intervenor-Appellee Nevada
Division of Environmental Protection.

Thomas Vandenburg, Joshua Levine, Christopher Smith and
John A. Lawrence (argued), Dongell Lawrence Finney, LLP,
Los Angeles, California, for Defendants-Iintervenors-
Appellees Maryland Square Shopping Center, LLC, et al.

Jeremy Gilman and Gregory J. Lucht (argued), Benesch,
Friedlander, Coplan & Aronoff, LLP, Cleveland, Ohio;
Jeffrey T. Oberman, Levin & Oberman, Beverly Hills,
California, for Defendants-Appellants Melvin Shapiro and
Shapiro Brothers Investment Co.

Franklin H. Levy and Joshua M.D. Segal (argued), Lawson &
Weitzen, LLP, Boston, Massachusetts; Shan Davis, Shan
Davis & Associates, Las Vegas, Nevada, for Defendant-
Appellant Maryland Square, LLC.
12 VOGGENTHALER V. MARYLAND SQUARE

OPINION

SCHROEDER, Circuit Judge:

Two environmental statutes everyone loves to hate are the
Comprehensive Environmental Response, Compensation, and
Liability Act (“CERCLA”) and the Resource Conservation
and Recovery Act (“RCRA”). In combination, they make
owners of contaminated property and contributors to
contamination responsible for cleaning up toxic waste, and,
if someone else cleans up the waste, liable for the costs of
that clean up. This litigation illustrates the point. It involves
seepage over several decades of a toxic dry cleaning chemical
into the ground under a Las Vegas shopping center. There
have been two district court actions leading to multiple
appeals.

Neighboring homeowners brought the first action, seeking
injunctive relief against the property owners of the shopping
center and operators of the dry cleaning facility. The Nevada
Division of Environmental Protection (“NDEP”) brought the
other action to recover its clean up costs. The district court
granted summary judgment for both sets of plaintiffs on all
claims. The current owner and the former operators of the
dry cleaning facility appeal. There are numerous procedural
issues, but the principal legal contention is that application of
CERCLA to this conduct that occurred solely in Nevada
violates the Commerce Clause.

We largely affirm the district court, including its rejection
of that constitutional challenge. We vacate the grant of
summary judgment under CERCLA against the current owner
and remand so the owner may have an opportunity to make
the additional showing that would be necessary to establish
 VOGGENTHALER V. MARYLAND SQUARE 13

that it meets an exception to CERCLA liability. We reverse
on procedural grounds the grant of summary judgment under
RCRA against the current owner and the operators because
those defendants did not have an adequate opportunity to
respond to plaintiffs’ claims. We also reverse the grant of
summary judgment against one guarantor, because there is no
evidence of spills during the term of his guaranty.

THE STATUTES

CERCLA and RCRA, passed by Congress within a few
years of each other, both address the problem of
environmental contamination from hazardous waste disposal,
but they employ different means. Congress passed CERCLA
in 1980, motivated by several environmental catastrophes,
especially the infamous Love Canal disaster in Niagra Falls,
New York. S. Rep. No. 96-848, at 8–10 (1980). The statute
authorizes governments or private parties to clean up polluted
sites and seek compensation from the polluters. 42 U.S.C.
§ 9607. It is designed to ensure that the cost of clean up is
“borne by those responsible for the contamination.”
Burlington N. & Santa Fe Ry. Co. v. United States, 556 U.S.
599, 602 (2009). In this case, NDEP began a clean up of the
contaminated site due to the inaction of the owners and
operators, and then sued for the funds it had expended and
those that it would need to expend in the future.

RCRA, passed in 1976, focuses on limiting waste
production and ensuring that when waste is produced, it is
treated and disposed of properly. It plugged a then-existing
loophole in environmental law. Before its passage, disposing
pollutants into the water and air was regulated, but the land
disposal of hazardous substances was not. H.R. Rep. No. 94-
1491, at 4 (1976). RCRA’s primary purpose was “to reduce
14 VOGGENTHALER V. MARYLAND SQUARE

the generation of hazardous waste and to ensure the proper
treatment, storage, and disposal of that waste which is
nonetheless generated, ‘so as to minimize the present and
future threat to human health and the environment.’”
Meghrig v. KFC W., Inc., 516 U.S. 479, 483 (1996) (quoting
42 U.S.C. § 6902(b)). RCRA, in 42 U.S.C. § 6972,
authorizes citizen suits for two types of injunctive relief—an
injunction ordering the responsible parties to clean up the
contamination and an injunction ordering them to stop any
further violations. See Meghrig, 516 U.S. at 484. At the time
of the homeowners’ suit, the toxic spills had already occurred
and the dry cleaning operations had ceased. The homeowners
therefore sought an injunction ordering the owners and
operators to clean up, test, and monitor the contaminated site.

FACTS AND PROCEDURAL BACKGROUND

I. History of the Site and Its Contamination

Maryland Square Shopping Center (“the Site”), a Las
Vegas shopping center, was from 1969 to 2000 home to a dry
cleaning facility responsible for environmental
contamination. Maryland Square LLC (“Maryland Square”),
the current owner of the Site, has owned it since 2005. The
Site has had many prior owners, but only the Herman Kishner
Trust, a non-appealing defendant, owned the Site during the
contamination period. During that period two companies
leased the Site and operated the dry cleaning facility. Shapiro
Bros. Investment Co. (“SBIC”) operated it from 1969 until
1984. Johnson Group, Inc., the predecessor of DCI USA,
Inc., (collectively “DCI”) purchased the dry cleaning business
in 1984 and operated it until 2000.
 VOGGENTHALER V. MARYLAND SQUARE 15

The history is summarized in the following chart showing
the owners, operators, and known or alleged chemical spills:

Year Owners Operators Known/Alleged Incidents

1968 Herman Kishner N/A N/A

1969– Herman Kishner Shapiro Bros. Spill of ~100 gallons of
1984 Trust (w/ Maryland Investment Co. PCE in 1982. Occasional
Square Shopping spills from a clogged
Center LLC as button trap between
successor-in- 1969–1984.
interest)

1984– Herman Kishner DCI Alleged to have used PCE
2000 Trust (w/ Maryland in its operations. No
Square Shopping confirmed spills.
Center LLC as
successor-in-
interest)

2000– Herman Kishner N/A N/A
2002 Trust (w/ Maryland
Square Shopping
Center LLC as
successor-in-
interest)

2002– Clark County School N/A N/A
2005 District

2005– Maryland Square N/A Demolition of Site in 2006
Present LLC allegedly spread PCE.

Herman Kishner constructed the Site in 1968 and
transferred ownership to the Herman Kishner Trust the
following year. Beginning in 1969, the Trust leased the dry
cleaning facility to SBIC, and SBIC agreed in the lease to
indemnify the Trust for all claims arising from SBIC’s
16 VOGGENTHALER V. MARYLAND SQUARE

actions, omissions, or negligence. SBIC signed a
replacement lease in 1982 in which it agreed to indemnify the
Trust for violations of law. SBIC sold the dry cleaning
business to DCI in 1984. As part of the sale, Melvin Shapiro,
who formed and controlled SBIC with his brother Philip
Shapiro, personally guaranteed DCI’s performance of the
lease obligations, including the obligation to indemnify the
Site’s owner for any future violations of law.

The contamination at the Site was produced by a chemical
commonly used in the dry cleaning industry and called
tetrachloroethylene (“PCE”). PCE is a hazardous substance
as defined by CERCLA and the Nevada Administrative Code.
42 U.S.C. § 9601(14); Nev. Admin. Code § 445A.3454.
During its operation of the dry cleaning facility, SBIC used,
and spilled, PCE. According to former SBIC employees,
from time to time “a button trap would clog and amounts of
PCE would spill onto the concrete floor.” SBIC also
admitted that a spill of roughly 100 gallons of PCE occurred
during a filter change in 1982. When PCE spilled, it fell onto
a concrete floor equipped with a “trench style floor drain.”
The PCE then went down the drain through the pipes beneath
the floor and into the ground and groundwater.

II. Entry of the State of Nevada and Its Clean Up Efforts

The PCE discharge was first reported to NDEP on
November 29, 2000, during a pre-purchase investigation by
Clark County School District. When Maryland Square
purchased the property from the School District in 2005,
Maryland Square was aware of the contamination. Maryland
Square demolished the building in 2006, including the
contaminated floor, but made no efforts to remove any
contaminant beneath it.
 VOGGENTHALER V. MARYLAND SQUARE 17

After the initial discovery, NDEP, on July 21, 2001,
received a report from the environmental consultant
performing Clark County’s pre-purchase investigation.
NDEP oversaw further investigation of the Site that revealed
the presence of PCE in the soil and groundwater. The highest
PCE concentrations were found in and around the floor drain
and drain pipes beneath the former dry cleaning facility. The
investigation also revealed a plume of PCE-contaminated
groundwater emanating from the Site and extending eastward
into a nearby residential Las Vegas neighborhood. NDEP
then began its lengthy clean up of the soil.

The contaminated plume was a cause for concern. On the
basis of a soil gas report submitted to NDEP in 2007, NDEP
determined that there was a potential for PCE vapor intrusion
into the neighborhood homes at concentrations that could
materially increase the probability of cancer in exposed
individuals. To address the risks posed by PCE evaporating
into the air, NDEP offered to install subslab depressurization
systems in the homes. NDEP recognized, however, that it
also needed to reduce the PCE concentrations in the
groundwater in order to prevent potential future exposures,
because the plume was moving away from the Site. NDEP
informed residents, property owners, and government
officials of the PCE contamination in the groundwater and the
possible health effects.

NDEP also notified the current and former owners and
operators of the Site that NDEP considered them to be
potentially responsible parties under CERCLA for clean up
costs. NDEP stated in those notices in 2008 that it already
had expended approximately $160,000, that it intended to
spend more funds to address human exposure to PCE, and
that it planned to seek recovery of its expenses. NDEP has
18 VOGGENTHALER V. MARYLAND SQUARE

continued its clean up efforts over the following years, and
removed the contaminated soil in 2011.

III. History of the Litigation

In late 2008 and early 2009 two suits were filed in the
United States District Court for the District of Nevada against
the owners and operators of the Site. NDEP sued them under
both CERCLA and Nevada state law. Peter Voggenthaler,
with other neighborhood homeowners, sued under RCRA. In
the homeowners’ RCRA suit, the owners filed cross-claims
against the operators for indemnity.

NDEP’s action under CERCLA sought to recover the
costs of cleaning up the Site and a declaratory judgment
entitling NDEP to future clean up costs. NDEP contended
that all of the defendants, as owners or operators of a facility
that had released toxic chemicals, were liable under
CERCLA. Each of the defendants offered a separate reason
for why it was not liable, and several of the defendants
contended that the application of CERCLA to conduct solely
within Nevada violates the Commerce Clause. NDEP, under
Nevada state law, also sought recovery of clean up costs and
injunctive relief to prevent further violations. The district
court eventually granted summary judgment for NDEP on all
of its claims on May 17, 2012.

The homeowners filed their complaint under RCRA
seeking an injunction forcing all of the Site’s owners to clean
up the contamination, and contending that the owners were
contributors under RCRA. The homeowners did not seek
relief under state law. The Site’s owners all took the position
that they were not responsible for the actual spills, even
though they knowingly leased the Site to a dry cleaning
 VOGGENTHALER V. MARYLAND SQUARE 19

business and profited from the operation of that business.
The district court granted summary judgment for the
plaintiffs and against all of the owners on July 22, 2010.

The current owner, Maryland Square, however, moved for
rehearing after the entry of summary judgment on its RCRA
liability, contending that it was in a different position from
the other owners because its ownership of the property did
not begin until after the dry cleaning facility had closed
down. The homeowners responded to the motion for
rehearing, contending that Maryland Square nevertheless
should be considered a contributor under RCRA because its
demolition of the building in 2006 had exacerbated the
situation by exposing and disseminating the contamination.
The homeowners relied on the expert report that had been
attached to their summary judgment reply.

The district court, however, did not resolve the issue of
Maryland Square’s liability raised in the reconsideration
motion. Instead, the court concluded in an October 20, 2010
order that it lacked jurisdiction because the motion involved
the merits of the owners’ RCRA liability, and the other
owners had already filed a notice of appeal from the summary
judgment order on RCRA liability. (That premature appeal
was later consolidated by our court with the owners’ appeal
of the RCRA permanent injunction after the district court
proceedings became final.)

The district court then did enter a permanent injunction
under RCRA on December 27, 2010, ordering a clean up of
the Site. Although the plaintiffs had moved for summary
judgment on RCRA liability against only the owners, the
district court not only granted that motion, but, sua sponte,
also entered judgment and ordered injunctive relief against
20 VOGGENTHALER V. MARYLAND SQUARE

operator SBIC as well, even though plaintiffs had not moved
for such relief.

The owners’ leases to the operators contained
indemnification provisions. The owners therefore moved for
judgment in the RCRA litigation on their cross-claims for
indemnity against SBIC and Melvin Shapiro as operators.
The district court granted the motion as to both on October
20, 2010. Although only SBIC actually operated the
business, the court held Melvin Shapiro liable on the basis of
the guaranty he signed on the 1984 transfer of the business
from SBIC to DCI. The court rejected his position that the
guaranty acted only prospectively and did not take effect until
after the spills occurred.

We consider multiple appeals in each action.

DISCUSSION

I. Application of CERCLA to Soil and Groundwater
Contamination in Nevada Does Not Offend the
Commerce Clause

Maryland Square’s appeal challenges the application of
CERCLA to the contamination of the Site as violating the
Commerce Clause, because the PCE disposal physically
affected the Site and a nearby neighborhood within the state
of Nevada. The district court summarily rejected this claim.
Maryland Square relies primarily on the Supreme Court’s
opinions in United States v. Lopez, 514 U.S. 549 (1995), and
United States v. Morrison, 529 U.S. 598 (2000), the two
Commerce Clause decisions of the last twenty years
invalidating Congressional enactments. Neither involved
environmental issues. Lopez concerned regulation of conduct
 VOGGENTHALER V. MARYLAND SQUARE 21

near a school and Morrison involved violence against an
individual.

The Constitution states that “The Congress shall have
Power . . . To regulate Commerce with foreign Nations, and
among the several States, and with the Indian Tribes.” U.S.
Const. Art. I, § 8, cl. 3. This grant of authority has been
separated into three broad categories. Perez v. United States,
402 U.S. 146, 150 (1971). Under its commerce power,
Congress may regulate (1) “the use of the channels of
interstate or foreign commerce,” (2) “the instrumentalities of
interstate commerce . . . or persons or things in commerce,”
and (3) “those activities affecting commerce.” Id. These
categories were recognized in both Lopez and Morrison.
Maryland Square contends that none of the three categories
apply, but two of them do.

The application of CERCLA to contaminated soil and
groundwater is proper under the second and third categories
as regulation of articles in commerce and activities affecting
commerce. Groundwater may be regulated as an article of
commerce, because any item that may be bought or sold,
indeed all objects of trade, are articles of commerce. See Fort
Gratiot Sanitary Landfill, Inc. v. Michigan Dep’t of Natural
Res., 504 U.S. 353, 359 (1992). The Supreme Court has
expressly held that groundwater is an article of commerce,
because it can be traded. Sporhase v. Nebraska, ex rel.
Douglas, 458 U.S. 941, 953–54 (1982). There, the state of
Nebraska, in defending a state law limiting the interstate sale
of Nebraska groundwater, tried to contend that groundwater
was not an article of commerce. Id. at 951–52. According to
Nebraska, groundwater was not an article of commerce
because Nebraska’s residents did not enjoy an unlimited
ownership interest in the groundwater they withdrew and
22 VOGGENTHALER V. MARYLAND SQUARE

because groundwater was essential to its citizens’ survival.
Id. at 951–53. The Supreme Court rejected this argument,
citing Nebraska’s efforts to limit the sale of groundwater
within the state as proof that groundwater is an object of
trade. Id. at 953–54 (“[The] claim that Nebraska ground
water is not an article of commerce goes too far: it would not
only exempt Nebraska ground water regulation from burden-
on-commerce analysis, it would also curtail the affirmative
power of Congress to implement its own policies concerning
such regulation [of groundwater].”).

Maryland Square’s position in this case, that groundwater
found within a state cannot be an article of interstate
commerce, is the same as the position the Court rejected in
Sporhase. Indeed, the Supreme Court emphasized that the
federal government has a significant interest in groundwater
because groundwater is found in multistate aquifers and
facilitates irrigated farming that supplies markets worldwide.
Id. at 953. Congress, by making the protection of
groundwater and surface water a main priority of CERCLA,
acted on that federal interest. See 42 U.S.C. §§ 9605(c)(2),
9618.

In addition, we deal with a dry cleaning establishment that
created the contamination as part of its commercial operation,
and resulted in clean up costs that burdened commerce. The
clean up, as well as the business itself, substantially affect
interstate commerce. Application of CERCLA is supported
for those reasons as well. The Eleventh Circuit in United
States v. Olin Corporation, 107 F.3d 1506 (11th Cir. 1997),
recognized the economic burden of clean up costs in rejecting
a challenge to CERCLA very similar to the one in this case.
The chemical manufacturer in Olin contended that its on-site
disposal of hazardous substances did not affect interstate
 VOGGENTHALER V. MARYLAND SQUARE 23

commerce because the substances never left the site. Id. at
1511. The court rejected that contention, stating that
Congress, in passing CERCLA, recognized the growing
economic costs of handling and disposing hazardous
substances and that these costs were associated with both off-
site and on-site disposal. Id. Also recognizing that hazardous
substance clean up affects interstate commerce, the Second
Circuit in Freier v. Westinghouse Electric Corporation,
303 F.3d 176 (2d Cir. 2002), rejected a Commerce Clause
challenge to an amendment to CERCLA affecting the statute
of limitations for claims resulting from exposure to hazardous
substances. In upholding this amendment as an integral part
of CERCLA’s regulatory scheme, the court stated that the
generation and disposal of waste in connection with the
operation of a business are economic activities properly
regulated under the Commerce Clause. Id. at 202.

The Supreme Court’s decisions in Lopez and Morrison
concerning non-economic activity are not relevant here, for
the Court’s holding in both depended upon the conclusion
that the activities sought to be regulated were not commercial
activities. See Lopez, 514 U.S. at 561 (the criminal statute
prohibiting the knowing possession of a firearm in a school
zone had “nothing do with ‘commerce’ or any sort of
economic enterprise”); Morrison, 529 U.S. at 613 (gender-
motivated violent crimes “are not . . . economic activity”).

The Supreme Court has consistently held that Congress,
under the Commerce Clause, can regulate commercial
activities, even where the economic impact of the individual
defendant’s actions were far smaller than in this case, as with
home cultivation of medical marijuana. Gonzales v. Raich,
545 U.S. 1, 26–27 (2005). The Court has made no de
minimus exception. Courts will not “excise, as trivial,
24 VOGGENTHALER V. MARYLAND SQUARE

individual instances” of a class of activities that is within the
federal power. Id. (internal quotations and citations omitted).

II. Maryland Square Has Not Shown That It Qualifies for
an Exception to CERCLA Liability, and It Is Clearly
Responsible for Reimbursement Under Nevada State
Law

Maryland Square contends that even if CERCLA may be
constitutionally applied, Maryland Square nevertheless
should not be liable because it qualifies as a bona fide
prospective purchaser under CERCLA. It also challenges its
liability under the Nevada state law requiring the owners of
a contaminated site and those responsible for the hazardous
spill to reimburse the State after it cleans up the
contamination. We deal with each contention in turn.

A. Maryland Square Did Not Establish That It
Qualifies as a Bona Fide Prospective Purchaser
Under CERCLA

CERCLA is a strict liability statute in that it does not
require a party to act culpably in order to be liable for clean
up. Cal. Dept. of Toxic Substances Control v. Hearthside
Residential Corp., 613 F.3d 910, 912 (9th Cir. 2010). Our
court has described the four elements that create liability.
3550 Stevens Creek Associates v. Barclays Bank of Cal.,
915 F.2d 1355, 1358 (9th Cir. 1990). A plaintiff must
establish: (1) the site containing the hazardous substances is
a facility under CERCLA; (2) a release or threatened release
of a hazardous substance has occurred from that facility; (3)
the plaintiff incurred response costs as a result of that release
or threatened release and those costs were necessary and
consistent with the national contingency plan; and (4) the
 VOGGENTHALER V. MARYLAND SQUARE 25

defendant is in one of the categories of entities subject to the
liability provisions of CERCLA § 107(a). Id.

Maryland Square does not contest the first three elements.
The Site is a facility under CERCLA because hazardous
substances were disposed there. 42 U.S.C. § 9601(9). A
hazardous substance was released when the operators spilled
PCE down the drain, through the pipes and into the
environment. 42 U.S.C. § 9601(22). NDEP’s response was
necessary because no party had taken responsibility for the
clean up. 42 U.S.C. § 9607(a).

Maryland Square contends it falls within 42 U.S.C.
§ 9607(r)(1), the bona fide prospective purchaser exception
to liability. This provision exempts from liability those who
in good faith purchased a property they did not contaminate,
but only provided they meet certain conditions. It states that:

a bona fide prospective purchaser whose
potential liability for a release or threatened
release is based solely on the purchaser’s
being considered to be an owner or operator
of a facility shall not be liable as long as the
bona fide prospective purchaser does not
impede the performance of a response action
or natural resource restoration.

Id.

The statute further provides, however, that a defendant
must meet eight separate criteria to qualify as a bona fide
prospective purchaser. 42 U.S.C. § 9601(40)(A)–(H). An
owner seeking to qualify as a bona fide prospective purchaser
must establish, among other things, that it purchased the
26 VOGGENTHALER V. MARYLAND SQUARE

property after the hazardous substances were spilled,
42 U.S.C. § 9601(40)(A), made all appropriate inquiries
before it purchased the property, 42 U.S.C. § 9601(40)(B),
provided all legally required notices about the hazardous
substances, 42 U.S.C. § 9601(40)(C), and took steps to stop
any ongoing spill, prevent future spills, and limit the exposure
from past spills, 42 U.S.C. § 9601(40)(D).

Regulations further spell out the steps an owner must take
to qualify. An owner seeking to establish that it made “all
appropriate inquiries,” for example, must show that the
examination was performed by an environmental
professional, as defined in 40 C.F.R. § 312.10, that particular
kinds of information about the property, its history and its
value were collected, 40 C.F.R. § 312.22, and that various
sources were consulted, 40 C.F.R. § 312.30. All of these
steps must be taken prior to the purchase, but no more than a
year before the purchase date. 40 C.F.R. § 312.20. The
owner, furthermore, must interview past owners and
operators, search for environmental cleanup liens, review
government records, inspect the property, and obtain a
declaration by the environmental professional no more than
180 days before the purchase date. Id.

Maryland Square attempted to establish it satisfied these
requirements by submitting the “Supplemental Affidavit” of
Paul G. Roberts, Maryland Square’s manager. The district
court did not consider this submission because it was not
notarized, and for that reason concluded that Maryland
Square had failed to meet its burden.

The “affidavit” should have been notarized, but the
district court did not give Maryland Square an opportunity to
correct that deficiency. Nor did the court consider the
 VOGGENTHALER V. MARYLAND SQUARE 27

contents of the submission to determine whether they would
have been sufficient if notarized. The parties on appeal
assume the truth of the statements and address the merits of
Maryland Square’s contention that the facts stated would
show it qualifies as a bona fide prospective purchaser.

Roberts’s submission stated that the seller, Clark County
School District, disclosed the PCE contamination during the
sale negotiations and that Maryland Square then retained
counsel and hired Entrix, Inc., an environmental consulting
firm, to review and report on the NDEP files concerning the
Site. After purchasing the Site, Maryland Square hired an
environmental contractor to demolish the building. The
submission does not indicate that Maryland Square took any
remedial steps, such as removing the soil after demolishing
the building, but says only that Maryland Square followed the
progress of the previous owners in drafting and submitting
plans to clean up the Site, and that Maryland Square had
some (mainly undescribed) correspondence with NDEP.

The statements in the submission are insufficient to
establish Maryland Square satisfied the requirements for bona
fide prospective purchaser status. They do not establish
Maryland Square met requirements of 42 U.S.C.
§ 9601(40)(D) to prevent further harm, because Maryland
Square failed to limit human and environmental exposure to
a contamination already present. The submission
acknowledges Maryland Square purchased the Site with
knowledge of the contamination, and subsequently
demolished the building, an action that exposed the
contaminated soil to the elements, but identifies no steps that
it took to remove the contaminated soil or limit the spread of
PCE. NDEP was then forced to remove the contaminated soil
six years after the building was destroyed, thereby creating a
28 VOGGENTHALER V. MARYLAND SQUARE

situation contemplated by Congress when enacting
CERCLA—reimbursement of a government entity forced to
clean up a site because the owner refused to take action. See
42 U.S.C. § 9607(a)(4)(A).

In addition, Maryland Square’s submission does not
discuss the numerous regulatory requirements for making
appropriate inquiries. See 42 U.S.C. § 9601(40)(B); 40
C.F.R. §§ 312.10, 312.20 et seq. The submission, without
providing necessary supporting information, merely states
that Maryland Square retained Entrix, Inc. to review files and
prepare a report. It does not indicate if Entrix employed a
qualified environmental professional, the substance of the
report, or any description of the assessment conducted. See
40 C.F.R. §§ 312.10, 312.20 et seq. Maryland Square’s
submission was woefully insufficient to establish it was a
bona fide prospective purchaser within the meaning of
CERCLA.

The district court, however, rejected the submission on
the basis of its form rather than its substance, and did not give
Maryland Square a chance to make any additional showing.
We therefore vacate the district court’s grant of summary
judgment against Maryland Square so that it may have an
opportunity to cure the formal and substantive deficiencies of
its prior submission and establish that it has met the statutory
and regulatory requirements to qualify as a bona fide
prospective purchaser.
 VOGGENTHALER V. MARYLAND SQUARE 29

B. Maryland Square is Liable to the State under
Nevada Law Because It Owned the Property and
Failed to Remove the Contaminated Soil

Pursuant to Nevada law, Nevada has established an
account from which it may spend money to respond to a
hazardous spill, manage the clean up of a contaminated site,
and remove the hazardous substance. Nev. Rev. Stat.
§ 459.537. Under the statute, money from the “Account for
the Management of Hazardous Waste” may be spent to pay
the costs of responding to a leak or spill if the person
responsible did not promptly clean it up. Id. Once this
money has been spent, the statute instructs NDEP to demand
reimbursement from various people, including “any person
. . . who owns or controls . . . the area used for the disposal of
the waste, material or substance.” Id. This must include the
current owner.

Maryland Square, as the current owner, tries to maintain
it is not responsible under the statute because it did not own
the Site at the time of the PCE disposal. However, the state
statute contains no exceptions, nor does it limit the
reimbursement obligation to those responsible for the spill.

Maryland Square also challenges the grant of injunctive
relief under Nevada Revised Statutes § 445A.695, on the
ground that it was not responsible for any discharges of PCE.
Under this statute, NDEP may seek an injunction “to prevent
the continuance or occurrence of any act or practice which
violates any provision of NRS 445A.300 to 445A.730 . . . .”
Id. NDEP contends that Maryland Square violated Nev. Rev.
Stat. § 445A.465, a state statute that encompasses not only
discharges, but also the failure to clean up a spilled
contaminant that may enter the State’s waters. The statute
30 VOGGENTHALER V. MARYLAND SQUARE

makes it unlawful to “[a]llow a pollutant discharged from a
point source or fluids injected through a well to remain in a
place where the pollutant or fluids could be carried into the
waters of the State by any means.” Nev. Rev. Stat.
§ 445A.465(1)(d). Maryland Square allowed PCE to remain
in the soil for six years, and the PCE did enter the waters of
the State. The district court, therefore, correctly granted
summary judgment on NDEP’s claim for injunctive relief as
well.

III. NDEP Was Entitled to Summary Judgment
Against the Operator, SBIC, on the CERCLA and
State Law Claims

NDEP sued SBIC under CERCLA because SBIC
operated the dry cleaning facility and disposed of the PCE.
Among the categories of entities that CERCLA holds liable
are operators of a facility where there was a “disposal” of
hazardous substances. CERCLA liability may be assessed
against “any person who at the time of disposal of any
hazardous substance owned or operated any facility at which
such hazardous substances were disposed of.” 42 U.S.C.
§ 9607(a)(2). “Disposal” means the “discharge, . . . spilling,
leaking, or placing of any solid waste or hazardous waste into
or on any land or water so that such solid waste or hazardous
waste or any constituent thereof may enter the environment
or be emitted into the air or discharged into any waters,
including ground waters.” 42 U.S.C. § 6903(3). SBIC’s
principal challenge to its CERCLA liability is that it did not
operate the facility “at the time of disposal” because it leaked
the contaminant onto the floor, not into the natural
environment.
 VOGGENTHALER V. MARYLAND SQUARE 31

SBIC does not dispute the facts. It operated the dry
cleaning facility at the Site between 1969 and August 31,
1984. SBIC’s lease agreement for the facility called for it to
be built with a trench style “sewage drain adequate for
[SBIC’s] business.” SBIC admits that it used PCE in its
operations and that it regularly spilled PCE on the concrete
floor, and once spilled roughly 100 gallons of PCE during a
filter change in 1982.

SBIC argues that spilling PCE onto the floor, rather than
directly onto the land or water, does not count as a “disposal.”
SBIC’s argument, therefore, is that the statute must be
interpreted to require a disposal directly into the groundwater
or onto the land. This interpretation is contrary to the
language of the statute. A “disposal” under the statute
includes any discharge or spill of waste “into or on any land
or water so that [the waste] may enter the environment . . . .”
42 U.S.C. § 6903(3) (emphasis added). Because the phrase
“enter the environment” is qualified by the word “may” in the
definition of “disposal,” the statute cannot be interpreted to
cover only spills that go directly and immediately into the
groundwater. The statute contemplates that some spills may
never enter the environment. The definition covers more than
direct spills. SBIC’s interpretation conflicts with our practice
of construing CERCLA liberally to achieve the goals of
cleaning up hazardous waste sites promptly and ensuring that
the responsible parties pay the costs of the clean up. Carson
Harbor Vill., Ltd. v. Unocal Corp., 270 F.3d 863, 881 (9th
Cir. 2001).

The only other courts to consider an interpretation like
SBIC’s requiring “disposal” to be directly onto the land or
into the water have rejected it. See Amland Props. Corp. v.
Aluminum Co. of Am., 711 F. Supp. 784, 791–92 (D.N.J.
32 VOGGENTHALER V. MARYLAND SQUARE

1989) (concluding that a disposal inside a plant was a
disposal “on any land”); Lincoln Properties, Ltd. v. Higgins,
No. S-91-760DFL/GGH, 1993 WL 217429, at *19–20 (E.D.
Cal. Jan. 21, 1993) (stating that a release into the environment
need not be direct). Their reasoning is sound. SBIC cites no
contrary authority on point.

Because we conclude that NDEP has established SBIC’s
liability for past costs under CERCLA, NDEP is also entitled
to a declaratory judgment for future costs. City of Colton v.
Am. Promotional Events, Inc.–W., 614 F.3d 998, 1007 (9th
Cir. 2010). In City of Colton, we held that a plaintiff who
establishes liability for past response costs under CERCLA is
entitled to a declaratory judgment on liability for future costs.
Id. (citing 42 U.S.C. § 9613(g)(2)).

SBIC also, and on a similar basis, challenges the district
court’s grant of summary judgment on NDEP’s state law
claim under Nev. Rev. Stat. § 445A.695, which authorizes
injunctive relief to prevent the continuation or reoccurrence
of other statutory violations. SBIC contends that it did not
operate the facility at the time the PCE actually touched the
soil or groundwater. This fact is not relevant. NDEP has
charged that SBIC violated Nev. Rev. Stat. § 445A.465,
which makes it unlawful to “[d]ischarge from any point
source any pollutant into any waters of the State . . . .” Nev.
Rev. Stat. § 445A.465(a), (d). A drain pipe is a point source.
Nev. Rev. Stat. § 445A.395. SBIC spilled PCE into the drain
of the facility. The PCE was thus discharged through the
drains as the point sources. SBIC is therefore liable for the
resulting contamination of the groundwater.
 VOGGENTHALER V. MARYLAND SQUARE 33

IV. The District Court Did Not Decide the Issue
Raised By Maryland Square’s Motion for
Reconsideration, So Remand is Required to
Determine Whether Maryland Square Has RCRA
Liability for Exposing the Contamination to the
Elements

The homeowners sought an injunction under RCRA to
require all of the owners of the Site, including Maryland
Square, to clean up the contamination. An entity may be held
liable under RCRA if it is an active contributor to the
contamination on the site. Liability may be assessed against:

any person . . . who has contributed or who is
contributing to the past or present handling,
storage, treatment, transportation, or disposal
of any solid or hazardous waste which may
present an imminent and substantial
endangerment to health or the environment.

42 U.S.C. § 6972(a)(1)(B). Maryland Square’s original
position was the same as the other owners of the Site:
ownership of the Site was insufficient to establish liability.
The district court rejected the Site owners’ contention and
granted summary judgment for the homeowners.

Maryland Square then moved for rehearing and advanced
a new theory. It contended that it was in a different position
from the other owners because it acquired the property after
the dry cleaning facility had closed down. The homeowners
opposed the motion for rehearing on the ground that even if
Maryland Square did not own the Site when the spills
happened, Maryland Square’s demolition of the building in
2006 exposed the contaminated soil, exacerbating the
34 VOGGENTHALER V. MARYLAND SQUARE

problem and making Maryland Square a contributor. The
homeowners relied on the expert report that they had attached
to their summary judgment reply and that explained the
effects of the demolition.

The district court did not resolve this issue, however.
Instead, the district court ruled that it was divested of
jurisdiction to decide the motion for reconsideration when the
other Site owners appealed the earlier order granting
summary judgment on the merits of the owners’ RCRA
liability. The court was incorrect because the earlier order
determined only liability, not relief, and was not a final
judgment. Thus, the appeal was taken prematurely from an
interlocutory order. See State of Cal., on Behalf of California
Dep’t of Toxic Substances Control v. Campbell, 138 F.3d
772, 776–77 (9th Cir. 1998). Because the district court
effectively denied the motion on jurisdictional grounds,
Maryland Square never had the opportunity to respond to the
merits of the homeowners’ alternative theory of liability. We
therefore reverse the district court’s denial of Maryland
Square’s motion for reconsideration, and remand so the issue
of Maryland Square’s RCRA liability may be fully
considered.

V. The District Court Erred in Entering an Injunction
Against SBIC for Clean Up Responsibilities Under
RCRA in the Absence of Any Request for Judgment
on the Underlying Claim

The district court granted summary judgment against the
operator, SBIC, sua sponte, followed by a RCRA permanent
injunction. This was error, because the homeowner plaintiffs
in the RCRA suit never moved for summary judgment against
SBIC.
 VOGGENTHALER V. MARYLAND SQUARE 35

There are only two general situations where a district
court may sua sponte enter summary judgment; neither
applies to this case. A district court may enter summary
judgment against a party that has moved for summary
judgment when the court determines the moving party cannot
prove its case at trial. See Gospel Missions of Am. v. City of
Los Angeles, 328 F.3d 548, 553 (9th Cir. 2003); Cool Fuel,
Inc. v. Connett, 685 F.2d 309, 311 (9th Cir. 1982). Here,
SBIC did not ask for summary judgment in the homeowners’
RCRA case. The second situation is when a Fed. R. Civ. P.
12(b)(6) motion is converted into a motion for summary
judgment under Rule 56 by consideration of materials outside
the pleadings. Fed. R. Civ. P. 12(d). That did not occur here
either.

The homeowner plaintiffs in the action have not tried to
defend the district court’s sua sponte order that SBIC now
appeals. The defendant owners argue the result is fair since
they are happy to have SBIC share their liability. Such
determinations of liability and injunctive remedy are
appropriate only after a court has considered the positions of
all the parties. Portsmouth Square Inc. v. S’holders
Protective Comm., 770 F.2d 866, 869 (9th Cir. 1985). Here,
the district court’s sua sponte orders were entered without
such consideration and must be vacated.

VI. SBIC is Liable to the Previous Owners Under the
Indemnification Provisions of the 1968 and 1982
Leases

Both of the lease agreements that SBIC reached with the
Site owners contained indemnification provisions. Under
Nevada law, indemnification provisions are interpreted like
any other contract provision, according to normal contract
36 VOGGENTHALER V. MARYLAND SQUARE

rules. George L. Brown Ins. v. Star Ins. Co., 237 P.3d 92,
96–97 (Nev. 2010). The 1968 indemnification provision
covered all claims arising from SBIC’s actions as operator of
the business. It stated as follows:

Lessee agrees to indemnify and save harmless
lessor from and against all claims arising from
any act, omission or negligence of lessee . . .
or employees or arising from any accident,
injury or damage whatsoever caused to any
person, or to the property of any person
during the demised term, in or about the
demised premises . . . and will indemnify and
hold harmless Lessor from and against all
costs, expenses and liabilities incurred in or in
connection with any such claim or proceeding
brought thereon.

The provision covers the homeowners’ claims for SBIC’s
spills. SBIC admitted that from time to time during its
operation of the dry cleaning facility “a button trap would
clog and amounts of PCE would spill onto the concrete
floor.” SBIC also stated that a spill of roughly 100 gallons of
PCE occurred in 1982 during a filter change. The RCRA
claims from the homeowners arose from these spills, and the
Site’s previous owners claim they are entitled to indemnity
from SBIC pursuant to the lease.

SBIC contends it is not liable because the previous
owners have not proved that the contamination of the soil and
groundwater happened “during the demised term” of its lease.
The basis for liability under the guaranty, however, is the
RCRA claim that arose from conduct of SBIC’s employees
 VOGGENTHALER V. MARYLAND SQUARE 37

during the lease. Their PCE spills occurred during the lease
term.

SBIC also contends that the 1982 lease terminated any
liability it might have had from the 1968 lease. The provision
it points to in the 1982 lease stated in relevant part as follows:

TRANSITION AND TERMINATION OF
PRIOR LEASE – As has been aforestated
herein, LANDLORD and TENANT have
heretofore held and been in a Landlord-Tenant
relationship, the same being under a lease
dated April 29, 1968 and addendum thereto
dated February 27, 1969. With respect
thereto, upon the commencement of the lease
term hereunder, said prior lease, addendum,
and any rights and obligations of the
respective parties arising out of the same shall
be deemed terminated as if said lease as
amended had expired by its term, i.e., lapse of
time . . . .

The 1982 lease terminated the provisions of the prior lease,
but did not extinguish the obligations SBIC incurred during
its term.

SBIC also challenges its liability under the 1982 lease.
The indemnification provision in that lease covered all
obligations that were the result of SBIC violating a law. The
provision read as follows:

INDEMNIFICATION – TENANT hereby
covenants to indemnify, save and hold
LANDLORD and the leased property free,
38 VOGGENTHALER V. MARYLAND SQUARE

clear and harmless from each liability, loss,
cost, charge, penalty, obligation, expense,
attorney’s fee, litigation, judgment, damage,
claim or demand of any kind whatsoever in
connection with, arising out of, or by reason
of any violation of law, ordinance or
regulation by TENANT or of any independent
contractor, agent, or employee of TENANT
while in, upon, about or in any way connected
with the leased property or any portion thereof
during the term of this Lease.

SBIC contends that a claim for relief under RCRA does not
arise out of a “violation of law” within the meaning of the
provision. RCRA, however, imposes liability for failure to
clean up contamination, and one who has not paid has
violated the law. SBIC thus must indemnify the owners for
the obligations they incurred as a result of SBIC’s RCRA
violations.

VII. The District Court Erred in Holding Melvin
Shapiro Liable on His Personal Guaranty Because
the Guaranty Operated Only Prospectively and
There Was No Evidence of Spills Occurring After
He Signed the Guaranty

Melvin Shapiro, a co-founder and officer of SBIC, signed
a guaranty when SBIC transferred the dry cleaning business
to DCI. Under Nevada law, guaranty agreements are
interpreted according to general contract interpretation
principles. Dobron v. Bunch, 215 P.3d 35, 37 (Nev. 2009).
By signing the guaranty at issue in this case, Melvin Shapiro
personally guaranteed that DCI would perform all of SBIC’s
 VOGGENTHALER V. MARYLAND SQUARE 39

obligations, including the obligation to indemnify. The
personal guaranty at issue here read as follows:

The undersigned, jointly and severally,
unconditionally guarantees performance by
Assignee of each and every one of the
obligations of tenant under the lease herein
assigned . . .

The date of the Assignment was August 31, 1984. A
guaranty agreement is prospective unless it expressly states
otherwise. 38A C.J.S. Guaranty § 59; Bank of Am. Nat. Trust
& Sav. Ass’n v. Kelsey, 44 P.2d 617, 619 (Cal. Ct. App. 1935)
(“It is a rule of very general application that all guaranties are
prospective and not retrospective in operation, unless the
contrary appears by express words or by necessary
implication.”). Because this principle has not been addressed
by the Nevada Supreme Court, we must predict how the
Nevada Supreme Court would rule. Arizona Elec. Power Co-
op., Inc. v. Berkeley, 59 F.3d 988, 991 (9th Cir. 1995).
Counsel for the previous owners commendably conceded at
oral argument that such guarantees are generally only
prospective. There is no reason to believe that Nevada would
deviate from this widely-recognized rule for interpreting a
guaranty.

The previous owners did not identify any violation of the
1982 lease that occurred after the effective date of the
Assignment. The only spills the previous owners referenced
were those that occurred during SBIC’s operation of the
facility. Because the violations occurred before Melvin
Shapiro signed the guaranty, and it did not apply
retroactively, the judgment against him must be reversed.
40 VOGGENTHALER V. MARYLAND SQUARE

CONCLUSION

The district court properly rejected Maryland Square’s
constitutional challenge to the application of CERCLA in this
case, and correctly granted judgment against Maryland
Square and in favor of NDEP on its state law claims.

The district court’s judgment in favor of NDEP and
against SBIC on both the CERCLA and the state law claims
must be affirmed. The judgment against SBIC on the claims
of the prior Site owners for indemnity was in accordance with
the provisions of the leases and must be affirmed.

The district court erred, however, in entering judgment
against Maryland Square on NDEP’s CERCLA claim without
giving Maryland Square an opportunity to correct the
deficiencies in its “bona fide prospective purchaser”
submission. The district court also erred in denying for lack
of jurisdiction Maryland Square’s motion for reconsideration
of the RCRA judgment, and we remand for consideration on
the merits.

In the homeowners’ RCRA action, the district court erred
in entering judgment against SBIC sua sponte and the
judgment, as well as the ensuing injunction, must be vacated.

Although the district court properly held that the prior
Site owners were entitled to indemnification from SBIC, the
court erred in holding Melvin Shapiro was individually liable
for indemnification on the basis of his personal guaranty that
operated only prospectively.

Our decision may be summarized with reference to each
of the five appeals before us as follows:
 VOGGENTHALER V. MARYLAND SQUARE 41

The district court’s judgment in favor of NDEP on the
CERCLA and Nevada state law claims against SBIC is
AFFIRMED (12-16409).

The district court’s judgment against Maryland Square on
the CERCLA claim is REVERSED and REMANDED. The
judgment against Maryland Square on the Nevada state law
claims is AFFIRMED (12-16412).

The RCRA judgment against Maryland Square is
REVERSED and REMANDED with instructions to consider
Maryland Square’s motion for reconsideration (10-17520).
The sua sponte entry of summary judgment against SBIC
under RCRA is VACATED and REMANDED, and the
permanent injunction entered under RCRA is VACATED as
to SBIC (11-15174).

The judgment for indemnity against SBIC is
AFFIRMED, and the judgment for indemnity against Melvin
Shapiro is REVERSED and REMANDED with instructions
to enter judgment in favor of Melvin Shapiro (11-15176).

AFFIRMED in part, REVERSED in part, VACATED
in part, and REMANDED in part.

Costs are awarded to NDEP in No. 12-16409 and No. 12-
16412, and to Melvin Shapiro in No. 11-15176. In Nos. 11-
15174 and 10-17520, each party is to bear its own costs.