Chubb Custom Insurance Company v. Space Systems/ Loral, Inc.

FOR PUBLICATION

UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

CHUBB CUSTOM INSURANCE No. 11-16272
COMPANY , for itself and as subrogee
of, and in the name of Taube Koret D.C. No.
Campus for Jewish Life, 5:09-cv-04485-
Plaintiff-Appellant, JF

v.
OPINION
SPACE SYSTEMS/ LORAL, INC., a
Delaware Corporation Successor
Ford Aerospace and
Communications Corp.; FORD
MOTOR COMPANY ; SUN
MICROSYSTEMS, INC., a Delaware
Corporation; CHEVRON
CORPORATION ; HARMAN
STEVENSON INC., a California
corporation doing business as KFC,
Defendants-Appellees.

Appeal from the United States District Court
for the Northern District of California
Jeremy D. Fogel, District Judge, Presiding

Argued and Submitted
November 8, 2012—San Francisco, California

Filed March 15, 2013
2 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL

Before: Ronald M. Gould, and Milan D. Smith, Jr., Circuit
Judges, and Kevin Thomas Duffy, District Judge.*

Opinion by Judge Milan D. Smith, Jr.;
Dissent by Judge Gould

SUMMARY**

Environmental Law

The panel affirmed the district court’s dismissal of an
insurance company’s subrogation suit under the
Comprehensive Environmental Response, Compensation, and
Liability Act for recovery of insurance payments made to the
company’s insured for environmental response costs the
insured incurred in cleaning up pollutants released on its
property.

The panel held that the insurance company lacked
standing to bring suit under CERCLA § 107(a) because it did
not incur any “costs of response” related to the removal or
remediation of a polluted site, and because the common law
principle of subrogation does not apply to § 107(a). The
panel held that the insurance company could not bring a
subrogation claim under CERLCA § 112(c) because the
company did not allege that the insured was a “claimant,” or

*
The Honorable Kevin Thomas Duffy, United States District Judge for
the Southern District of New York, sitting by designation.

**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL 3

that it had made a claim either to the Superfund or to a
potentially liable party. The panel held that the insurance
company’s state law claims were time-barred.

Dissenting, Judge Gould wrote that the majority had
provided a reasoned explanation of why statutory subrogation
under § 112(c) did not apply, but that the majority’s analysis
of § 107(a) did not honor the insurance company’s right to
equitable subrogation.

COUNSEL

Kirk C. Chamberlin (argued), Chamberlin Keaster &
Brockman LLP, Encino, California, for Plaintiff-Appellant.

Kevin T. Haroff (argued), Marten Law, San Francisco,
California, for Defendant-Appellee Ford Motor Company.

Brent E. Rychener, Holme Roberts & Owen LLP, San
Francisco, California, for Defendant-Appellee Sun
Microsystems, Inc.

Robert C. Goodman (argued), Rogers Joseph O’Donnell,
P.C., San Francisco, California, for Defendant-Appellee
Chevron Corporation.

Scott L. Davis (argued), Gardere Wynne Sewell LLP, Dallas,
Texas, for Amicus Curiae Chartis Specialty Insurance
Company; John G. Nevius (argued) and Alexander Hardiman,
Anderson Kill & Olick, P.C., New York, New York, for
Amicus Curiae United Policyholders.
4 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL

OPINION

M. SMITH, Circuit Judge:

Plaintiff-Appellant Chubb Custom Insurance Company
( C h u b b ) f i l e d a s u b r o ga t i o n s u i t a g a i n s t
Defendants-Appellees1 for recovery of insurance payments
made to its insured, Taube-Koret Campus for Jewish Life
(Taube-Koret), for environmental response costs Taube-Koret
incurred in cleaning up pollutants released on its property. In
the operative Third Amended Complaint (TAC), Chubb
asserted subrogated claims under sections 107(a) and 112(c)
of the Comprehensive Environmental Response,
Compensation, and Liability Act (CERCLA), Pub. L. No. 96-
510, 94 Stat. 2767 (1980), as amended, 42 U.S.C.
§§ 9601–9675. Chubb also brought subrogated claims under
state law. The district court dismissed Chubb’s TAC with
prejudice under Federal Rule of Civil Procedure 12(b)(6).
Chubb appealed the dismissal. We conclude that Chubb has
no standing to bring suit under CERCLA section 107(a)
because it did not incur any “costs of response” related to the
removal or remediation of a polluted site, and because the
common law principle of subrogation does not apply to
section 107(a); Chubb cannot bring a subrogation claim under
section 112(c) because it did not allege that Taube-Koret was
a “claimant”; and Chubb’s state law claims are time-barred.
Accordingly, we affirm the district court.

1
D efendants-Appellees are Space Systems/Loral, Inc., Ford Motor
Company, Sun Microsystems, Inc., Chevron Corporation, and Harman
Stevenson, Inc. (collectively, Defendants).
 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL 5

FACTS AND PRIOR PROCEEDINGS

Chubb issued an environmental insurance policy to
Taube-Koret covering, among other things, remediation costs
related to certain pollution incidents on its property. After
extended negotiations, and pursuant to the policy, Chubb paid
Taube-Koret $2.4 million as reimbursement for
Taube-Koret’s cleanup costs of contaminants released on its
property. The gravamen of Chubb’s complaint is that
Defendants should be held jointly and severally liable for
Taube-Koret’s response costs because they released
hazardous substances that migrated to Taube-Koret’s property
from surrounding land that they owned and operated at
various times.2

A. The Site

The action involves approximately 47 acres of land,
which comprises properties located at 3825, 3963, and 3977
Fabian Way and 901 San Antonio Road in Palo Alto,
California (in the aggregate, the Site).3 Chubb alleges that
Ford Aerospace & Communications Corporation (Ford
Aerospace), now known as Defendant-Appellee Space
Systems/Loral, Inc. (Space Systems), owned and used the
Site from 1959 to 1990 to manufacture and sell
communications satellites, satellite equipment, and missile
guidance systems. Chubb claims that Ford Aerospace’s
manufacturing activities resulted in the release of Volatile

2
The factual background is based on the allegations in Chubb’s TAC.
W e emphasize that these are only alleged facts, which have not yet been
proven to be true.

3
The Site later incorporated 851 San Antonio Road in Palo Alto.
6 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL

Organic Compounds (VOCs) in the soil and groundwater.
Chubb further alleges that the Site was under the control and
supervision of Defendant-Appellee Ford Motor Company
(Ford Motor), the controlling entity of Ford Aerospace prior
to 1990. Ford Motor operated a dewatering system located at
3825 Fabian Way and conducted ineffective remediation
activities, which exacerbated the soil and groundwater
contamination and caused the migration of hazardous
substances onto Taube-Koret’s property.

On August 16, 1989, the California Regional Water
Quality Control Board (Water Board) issued Order No. 89-
137, naming Ford Aerospace a discharger of pollutants and
requiring it to clean up certain hazardous substances released
on the Site. In August 1990, Space Systems purchased the
assets of Ford Aerospace from Ford Motor and continued the
operations previously conducted by Ford Aerospace. Chubb
alleges that Ford Motor expressly agreed to assume liability
for compliance with Order No. 89-137 and successive orders.
Space Systems currently owns and occupies buildings located
at the three Fabian Way properties.

In 1988, Defendant-Appellee Sun Microsystems, Inc.
(Sun) acquired 901 San Antonio Road, a 12-acre parcel that
became part of the Site. The Water Board named Sun a
discharger of pollutants in Order Nos. 93-091, 96-023, and
99-043. The Water Board informed Sun in November 2001
that it intended to oversee the investigation and cleanup of
contaminants at 901 San Antonio Road and to recover
oversight costs. Chubb alleges that Sun failed to take
adequate measures to remediate or abate further
contamination caused by Sun’s demolition of a vehicle
maintenance building previously constructed by Ford
Aerospace and known to contain hazardous substances.
 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL 7

In June 2002, Sun sold its 12-acre parcel to Taube-Koret.
Chubb alleges that before selling the property, Sun knew
about the contaminated soil and groundwater on its property
but elected not to take remedial action. The 12-acre parcel on
901 San Antonio Road was later divided into a 4-acre parcel
(Parcel 1) and an 8-acre parcel (Parcel 2). Taube-Koret
retained Parcel 2 for the purpose of developing an
intergenerational community center with an independent and
assisted living facility for seniors.

From 1960 to 1977, Defendant-Appellee Chevron
Corporation (Chevron) owned and operated a gas service
station on a property adjacent to the Site located at 851 San
Antonio Road. Chubb alleges that during Chevron’s
operation and demolition of the gas station, hazardous
substances contaminated the soil and spread to the property.
Chevron also maintained underground storage tanks
containing waste oil and petroleum, which allegedly leaked
and spilled into the soil at 851 San Antonio Road.

From 1977 to 2007, Defendant Harman Stevenson, Inc.
(Stevenson) owned and operated a Kentucky Fried Chicken
restaurant at 851 San Antonio Road. Chubb alleges that
during the construction and demolition of the restaurant,
Stevenson released hazardous substances left by Chevron,
which continued to migrate onto the property.

On November 30, 2006, Taube-Koret purchased 851 San
Antonio Road, a parcel adjacent to 901 San Antonio Road,
for inclusion in its redevelopment project that involved both
properties.
8 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL

B. Site Cleanup Orders and Remediation

Soil and groundwater beneath Taube-Koret’s property
were found to be contaminated with hazardous substances,
including VOCs and polychlorinated biphenyls (PCBs). On
June 16, 1999, the Water Board issued Order No. 99-043,
which required named dischargers to clean up and abate the
effects of hazardous substances found on certain portions of
the Site: namely, 3825, 3963, and 3977 Fabian Way and 901
San Antonio Road. On August 12, 2003, after Taube-Koret
had acquired 901 San Antonio Road, the Water Board issued
Order No. R2-2003-0071, amending its previous order and
naming Taube-Koret a discharger based on Taube-Koret’s
June 2002 purchase of the property from Sun. Taube-Koret
complied with Order Nos. 99-043 and R2-2003-0071 by
performing the requisite environmental investigation,
assessment, remedial actions, and removal of hazardous
substances on its property. Between January and June 2006,
Taube-Koret submitted to the Water Board for approval a
Human Health Risk Assessment report, a Site Cleanup Plan
(SCP), and a Risk Management Plan (RMP) for the proposed
cleanup and development of 901 San Antonio Road. The
Water Board approved the SCP and RMP. Taube-Koret
removed contaminated soil from 901 San Antonio Road in
June and July 2006.

After Taube-Koret acquired 851 San Antonio Road, it
submitted a “Workplan for Phase II Investigation” to the
Water Board on December 18, 2006, and an Addendum on
February 2, 2007, relating to the San Antonio Road
properties. On February 7, 2007, the Water Board approved
the Workplan and Addendum. On March 14, 2007, the Water
Board issued Order No. R2-2007-0023 with respect to
Taube-Koret’s redevelopment project, directing Taube-Koret
 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL 9

to implement its RMP under a time schedule. Chubb alleges
that 851 San Antonio Road, purchased in November 2006 and
incorporated into Taube-Koret’s redevelopment project, thus
became subject to Order No. R2-2007-0023.

In January 2008, during the excavation and remediation
of 851 San Antonio Road, Taube-Koret discovered additional
contamination. Taube-Koret submitted a soil removal plan to
the Water Board, which approved the plan. Between
February and March 2008, Taube-Koret completed the
excavation and remediation of contaminated soil on 851 San
Antonio Road. Chubb alleges that during subsequent
excavation activities, Taube-Koret discovered Chevron’s
waste oil. On March 18, 2008, Taube-Koret removed 550
gallons of waste oil from the ground. Soil samples from the
excavation revealed the presence of hydrocarbons and other
contaminants. Vapor control systems were installed to
minimize the risk of vapor intrusion on the property.

On August 28, 2009, Taube-Koret submitted a detailed
completion report regarding all removal and remediation
activities completed in compliance with the RMPs and Order
No. R2-2007-0023. On September 9, 2009, the Water Board
issued written confirmation that Taube-Koret had fully
complied with all cleanup orders. Chubb alleges that
Taube-Koret incurred $2.4 million in response costs through
July 2008 for the removal of pollutants from the San Antonio
Road properties.

C. Insurance Policy and Payment to Taube-Koret

Chubb issued Taube-Koret an Environmental Site
Liability Insurance (Policy) for Taube-Koret’s two properties
on 901 and 851 San Antonio Road, effective from June 21,
10 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL

2002 to June 21, 2012. Taube-Koret paid Chubb an initial
policy premium of $153,259 for the 901 San Antonio Road
property, with a policy limit of $10 million and a $50,000
deductible for each pollution incident. The premium was
later increased by an additional $37,966 for coverage of 851
San Antonio Road. The Policy included a provision for the
Transfer of Rights of Recovery: “If the insured has rights to
recover all or part of any payment we have made under this
insurance, those rights are transferred to us.” The Policy also
referenced a “pollution incident” at the 851 San Antonio
Road property that was excluded from coverage.

On December 4, 2008, Chubb issued Taube-Koret a check
for $2.4 million, which “constituted the necessary cleanup
costs for responding to the release of hazardous substances”
on its San Antonio Road properties, and represented
“payment for all necessary Response Costs claims and
incurred” by Taube-Koret, “thereby making [Taube-Koret]
whole for its soil remediation costs.”

D. Procedural History

On September 23, 2009, Chubb filed suit against
Defendants. In the original complaint, Chubb asserted
CERCLA claims for cost recovery under section 107(a),
subrogation under section 112(c), and contribution and
declaratory relief under sections 113(f)–(g). Chubb also
asserted supplemental state law claims, including contractual
and equitable subrogation as well as statutory and equitable
indemnity. The district court dismissed Chubb’s initial
complaint with leave to amend. Chubb subsequently filed
two amended complaints, each of which was dismissed by the
district court with leave to amend. On January 6, 2011,
Chubb filed the operative TAC, renewing CERCLA claims
 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL 11

under sections 107(a) and 112(c). Chubb also asserted
subrogated state law claims for statutory indemnity under the
California Health and Safety Code, negligence per se, and
strict liability. The district court dismissed the TAC with
prejudice, and entered judgment on behalf of Defendants on
April 20, 2011. Chubb timely appealed.

STANDARD OF REVIEW

We review de novo the district court’s dismissal for
failure to state a claim under Federal Rule of Civil Procedure
12(b)(6). Lacey v. Maricopa Cnty., 693 F.3d 896, 911 (9th
Cir. 2012) (en banc). When evaluating a Rule 12(b)(6)
motion, the district court must accept all material allegations
in the complaint as true, and construe them in the light most
favorable to the non-moving party. Moyo v. Gomez, 32 F.3d
1382, 1384 (9th Cir. 1994). “To survive a motion to dismiss,
a complaint must contain sufficient factual matter, accepted
as true, ‘to state a claim to relief that is plausible on its
face.’ ” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting
Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
Dismissal is proper when the complaint does not make out a
cognizable legal theory or does not allege sufficient facts to
support a cognizable legal theory. Mendiondo v. Centinela
Hosp. Med. Ctr., 521 F.3d 1097, 1104 (9th Cir. 2008).
Although leave to amend should be given freely, Doe v.
United States, 58 F.3d 494, 497 (9th Cir. 1995), a district
court may dismiss without leave where a plaintiff’s proposed
amendments would fail to cure the pleading deficiencies and
amendment would be futile. Cook, Perkiss & Liehe, Inc. v.
N. Cal. Collection Serv. Inc., 911 F.2d 242, 247 (9th Cir.
1990) (per curiam). Where the district court’s decision is
based on the interpretation of a federal statute, such as
12 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL

CERCLA, we review that decision de novo. City of
Emeryville v. Robinson, 621 F.3d 1251, 1261 (9th Cir. 2010).

DISCUSSION

Congress enacted CERCLA in 1980, as amended by the
Superfund Amendments and Reauthorization Act of 1986
(SARA), Pub. L. No. 99-499, 100 Stat. 1613, “in response to
the serious environmental and health risks posed by industrial
pollution.” Burlington N. & Santa Fe Ry. Co. v. United
States, 556 U.S. 599, 602 (2009). Through a complex
statutory framework, CERCLA provides for the “liability,
compensation, cleanup, and emergency response for
hazardous substances released into the environment and the
cleanup of inactive hazardous waste disposal sites.” Carson
Harbor Vill., Ltd. v. Cnty. of Los Angeles, 433 F.3d 1260,
1265 (9th Cir. 2006) (Carson Harbor II) (citation and quotes
omitted). CERLCA was intended to promote the timely
cleanup of hazardous waste sites, ensure that polluters were
held responsible for the cleanup efforts, and encourage
settlement through specified contribution protection.
Burlington N., 556 U.S. at 602; City of Emeryville, 621 F.3d
at 1264. To effectuate these goals, CERCLA “grants the
President broad power to command government agencies and
private parties to clean up hazardous waste sites.” Key Tronic
Corp. v. United States, 511 U.S. 809, 814 (1994).4 The EPA
may either clean up a polluted site itself or compel
responsible parties to perform cleanups or reimburse the
government for EPA-led cleanups. 42 U.S.C. § 9604(a). The

4
CERCLA vests this authority in the President, who, in turn, has
delegated most of his functions and responsibilities to the Environmental
Protection Agency (EPA). See 42 U .S.C. §§ 9606(c), 9615; 40 C.F.R.
§ 300.100.
 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL 13

statute imposes strict liability on four categories of potentially
responsible parties (PRPs),5 for the cleanup costs of an
environmental hazard, even if the person did not contribute to
the contamination. United States v. Atl. Research Corp.,
551 U.S. 128, 136 (2007); 42 U.S.C. §§ 9607(a)(1)–(4).
CERCLA liability is also joint and several, “meaning that a
responsible party may be held liable for the entire cost of
cleanup even where other parties contributed to the
contamination.” Cal. Dep’t of Toxic Substances Control v.
Hearthside Residential Corp., 613 F.3d 910, 912 (9th Cir.
2010). CERLCA further establishes a tripartite remedial
scheme to enable the government and private parties to
pursue in a court of law: (1) cost-recovery actions under
section 107(a), (2) contribution actions under section
113(f)(1), and (3) subrogation actions under section
112(c)(2). The present appeal only involves the first and
third provisions under sections 107(a) and 112(c).

A. Subrogation Claims under CERCLA

Subrogation is a common law doctrine based in equity
that permits an insurer to take the place of the insured to
pursue recovery from third-party tortfeasors responsible for
the insured’s loss. See Intri-Plex Techs., Inc. v. Crest Group,
Inc., 499 F.3d 1048, 1053 n.6 (9th Cir. 2007). As the party
who pays the insured’s loss, the insurer (the subrogee)

5
“These categories include: (1) the current owners and operators of a
vessel or facility, (2) the former owners or operators of a facility at the
time of disposal of any hazardous substance, (3) any persons who
arranged for disposal or treatment of a hazardous substance at any facility
owned or operated by another party, and (4) transporters of such
substances to a disposal or treatment facility.” Team Enters., LLC v. W.
Inv. Real Estate Trust, 647 F.3d 901, 907 n.2 (9th Cir. 2011); see also
42 U.S.C. §§ 9607(a)(1)–(4).
14 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL

“stands in the shoes” of the insured (the subrogor), and
succeeds to the insured’s rights and remedies. See Am. Surety
Co. of N.Y. v. Bethlehem Nat. Bank of Bethlehem, Pa.,
314 U.S. 314, 317 (1941); In re Hamada, 291 F.3d 645, 649
(9th Cir. 2002). Aside from equitable subrogation, a
subrogation right may be expressly created by contract or
statute. In re Hamada, 291 F.3d at 649; Sapiano v.
Williamsburg Nat’l Ins. Co., 28 Cal. App. 4th 533, 537 n.1
(1994). The right of subrogation, however, cannot be
contractually enlarged beyond what is granted in equity.
Sapiano, 28 Cal. App. 4th at 538. An important limit to the
right of subrogation is that it is a purely derivative
right—meaning that the subrogee succeeds to rights no
greater than those of the subrogor. United States v.
California, 507 U.S. 746, 756 (1993); Fed. Ins. Co. v. Union
Pac. R.R. Co., 651 F.3d 1175, 1177 n.1 (9th Cir. 2011).

Chubb seeks to bring subrogated claims under both
sections 107(a) and 112(c) of CERLCA. Specifically, Chubb
alleges a section 107(a) claim as the equitable and contractual
subrogee of Taube-Koret. Chubb also brings a claim for
statutory subrogation under section 112(c). The district court
dismissed Chubb’s section 107(a) claim for lack of standing
because it determined that an insurance payment is not
included within the meaning of “costs of response,”
42 U.S.C. § 9607(a)(4)(B), as required under the statute, and
because permitting a subrogation action under that provision
would render section 112(c) a nullity. The district court
further dismissed Chubb’s section 112(c) claim because
Chubb did not allege that Taube-Koret was a “claimant.”
42 U.S.C. § 9612(c)(2). Chubb challenges both rulings,
arguing that it may bring a section 107(a) claim in
subrogation and that the insured need not be a claimant, as
defined by CERCLA, for the insurer to bring a subrogated
 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL 15

action under section 112(c). We draw on well-established
canons of statutory construction and relevant case law to
determine these issues.

1. Principles of Statutory Interpretation

In interpreting statutes, our task is to construe Congress’s
intent, and doing so requires us to “begin, as always, with the
language of the statute.” Duncan v. Walker, 533 U.S. 167,
172 (2001); accord Carson Harbor Vill., Ltd. v. Unocal
Corp., 270 F.3d 863, 877 (9th Cir. 2001) (Carson Harbor I)
(en banc). We apply the fundamental precept of statutory
construction that, unless otherwise defined, “words will be
interpreted as taking their ordinary, contemporary, common
meaning.” Perrin v. United States, 444 U.S. 37, 42 (1979).
But “[w]hen a statute includes an explicit definition, we must
follow that definition, even if it varies from that term’s
ordinary meaning.” Stenberg v. Carhart, 530 U.S. 914, 942
(2000); accord Carson Harbor I, 270 F.3d at 878. Moreover,
because words necessarily derive meaning from their context,
“[i]nterpretation of a word or phrase depends upon reading
the whole statutory text, considering the purpose and context
of the statute, and consulting any precedents or authorities
that inform the analysis.” Dolan v. U.S. Postal Serv.,
546 U.S. 481, 486 (2006); see also Carson Harbor I,
270 F.3d at 877 (“We look first to the plain language of the
statute, construing the provisions of the entire law, including
its object and policy, to ascertain the intent of Congress.”
(citation and quotes omitted)). Reviewing the whole statutory
scheme is particularly important for a law such as CERCLA,
which is a complex regulatory statute with “a web . . . of
sections, subsections, definitions, exceptions, defenses, and
administrative provisions.” Carson Harbor I, 270 F.3d at
880. We are, however, cautioned against following a literal
16 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL

interpretation of a statute that would thwart the overall
statutory scheme or lead to an absurd result. Wilshire
Westwood Assocs. v. Atl. Richfield Corp., 881 F.2d 801, 804
(9th Cir. 1989). Although we presume the application of
well-established common law principles to a federal statute,
this presumption does not apply “when a statutory purpose to
the contrary is evident.” United States v. Texas, 507 U.S.
529, 534 (1993) (citation and quotes omitted). Congress need
not “affirmatively proscribe” the common law principle to
evince this intent. Id. (citation and quotes omitted).

We first consider whether Chubb may pursue a
subrogation action under section 112(c), which expressly
provides for subrogation, and then consider whether it may
assert a section 107(a) claim in subrogation.

2. Subrogation under CERCLA Section 112(c)

The district court ruled that Chubb could not bring a
subrogation cause of action under section 112(c) because
Chubb had not alleged that Taube-Koret was a “claimant”
under the statute, defined as a person who demands
compensation for damages or costs from the Superfund or a
liable party resulting from a CERLCA violation.

The issue before us is whether Chubb has alleged that
Taube-Koret is a “claimant” under CERCLA. Section
112(c)(2) provides:

Any person, including the Fund, who pays
compensation pursuant to this chapter to any
claimant for damages or costs resulting from
a release of a hazardous substance shall be
subrogated to all rights, claims, and causes of
 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL 17

action for such damages and costs of removal
that the claimant has under this chapter or any
other law.

42 U.S.C. § 9612(c)(2). The statute defines “claimant” as
“any person who presents a claim for compensation under
this chapter.” 42 U.S.C. § 9601(5). A “claim” is “a demand
in writing for a sum certain.” 42 U.S.C. § 9601(4). Section
112(b) describes the forms and procedures for making a
claim, which include “a sworn verification of the claim.”
42 U.S.C. § 9612(b)(1). Under the statutory definitions, a
claimant then is any person who presents a written demand
for reimbursement of monetary costs under the statute—i.e.,
for a CERCLA violation. The definitions do not include to
whom this demand should be made, but we have held that “a
‘claim’ consistently refers to a demand for reimbursement
from the Superfund, except for its first appearance in the
second sentence of section 112(a),6 where it refers more
generally to a pre-claim/pre-action demand to the liable
party.” Idaho v. Howmet Turbine Component Co., 814 F.2d
1376, 1380 (9th Cir. 1987) (citation and quotes omitted); see
also 42 U.S.C. §§ 9601(4), 9612(a); S. Rep. No. 96-848 (July

6
Under section 112(a), “[n]o claim may be asserted against the Fund . . .
unless such claim is presented in the first instance to the owner, operator,
or guarantor of the vessel or facility from which a hazardous substance has
been released, if known to the claimant, and to any other person known to
the claimant who may be liable under section 9607 of this title.”
42 U.S.C. § 9612(a). In other words, before a claim can be made to the
Superfund, a party must first make such a claim against a liable party, if
known to the claimant. If the claim to a known PRP has not been satisfied
within 60 days of the presentation of the claim in the prescribed manner,
the claimant may present the claim to the Superfund for payment. Id. But
“[n]o claim against the Fund may be approved or certified during the
pendency of an action by the claimant in court to recover costs which are
the subject of the claim.” Id.
18 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL

11, 1980), CERCLA Leg. Hist. 38 (Lexis) at *81 (“In all
instances the claimant is required to first present his claim to
the potentially liable person or persons, if known, prior to
pursuing any right under [section 112].”). We find further
support for this reading when section 112(c)(2) is read in
conjunction with section 113(g)(4), which provides that “[n]o
action based on rights subrogated pursuant to this section by
reason of payment of a claim may be commenced under this
title more than 3 years after the date of payment of such a
claim.” 42 U.S.C. § 9613(g)(4) (emphasis added). Thus, in
essence, a claimant is a person who demands reimbursement
of environmental cleanup costs from (i) the Superfund or (ii)
a potentially liable party.7

Applied to this case, the definition of claimant required
Chubb to make a written demand for payment for its response
costs from potentially liable parties (alleged to be
Defendants). If Chubb reimbursed Taube-Koret for the
response costs, it could then bring a subrogation claim under
section 112(c)(2). Here, however, Chubb has not alleged that
Taube-Koret has made such a demand on Defendants, the
Superfund, or any other PRP. Chubb only alleges that Taube-
Koret has made an insurance claim to Chubb. There is no
indication that section 112(c)(2) contemplates this meaning
of claimant. In this section of CERCLA, Congress did not
simply use the broader term “person,” which the statute also
defines; instead, it employed the narrower term “claimant.”
Reading section 112(c) to authorize subrogation claims
irrespective of whether Taube-Koret qualifies as a “claimant,”
as Chubb urges, “violates the settled rule that a statute must,
if possible, be construed in such fashion that every word has

7
Because a successful claim to the Superfund requires a claim to a liable
party, if known, a claimant may have made a claim to both entities.
 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL 19

some operative effect.” United States v. Nordic Vill., Inc.,
503 U.S. 30, 36 (1992); accord Cooper Indus., Inc. v. Availl
Servs., Inc., 543 U.S. 157, 167 (2004). An insurer’s
subrogation right under section 112(c)(2) may be narrower
than under common law principles of equitable subrogation,
but it is within Congress’s right to impose such limits. See
United States v. A & P Trucking Co., 358 U.S. 121, 124
(1958) (“[T]he power of Congress to change the common law
rule is not to be doubted.”).

The limit also makes practical and policy sense. Under
the provision, subrogation rights vest once an insured makes
a claim to either the Superfund or a potentially liable party.
This means that the subrogee assumes the insured’s rights to
cost recovery, thereby preventing the insured from obtaining
double recovery from the insurance company and any PRPs.
Here, there is no such risk because Taube-Koret is not alleged
to have made any claim or to have identified any PRP. The
requirement that a party first request reimbursement from a
liable party, if known, also furthers the overall statutory
purpose of identifying PRPs and making actual polluters pay
for environmental cleanups. See infra Part A(5) [Statutory
Purpose and Public Policy].

Chubb argues that the district court’s interpretation
contravenes CERCLA’s statutory scheme and legislative
history. But Chubb cites no specific statutory language or
related materials in support of its position. Instead, Chubb
protests that reliance on Howmet Turbine is misplaced
because the court in that case was discussing the definition of
a claim in the context of a notice requirement for a civil
action. This argument has no relevance here. Our holding in
Howmet Turbine that there is no notice requirement for a civil
action under section 107(a) bears no relationship to the issue
20 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL

at hand, namely the definition of a “claim” within the context
of CERLCA, which the court clarified. The district court
properly dismissed Chubb’s section 112(c) claim.

3. Subrogation under CERCLA Section 107(a)

Chubb asserts a CERLCA section 107(a) claim as the
subrogee of Taube-Koret. We know of no controlling
authority or persuasive circuit authority on the issue of
whether section 107(a) authorizes a subrogated cost-recovery
action. Thus, we heed the rule that where a common law
principle is well-established, we presume that “Congress has
legislated with the expectation that the principle will apply
except when a statutory purpose to the contrary is evident.”
Astoria Fed. Sav. & Loan Ass’n v. Solimino, 501 U.S. 104,
108 (1991) (citation and quotes omitted); accord Texas,
507 U.S. at 534. To overcome this interpretative presumption
to a statutory scheme, Congress need not give a “clear
statement” to that effect, Soliminio, 501 U.S. at 108, or
“affirmatively proscribe” this principle, Texas, 507 U.S. at
534 (citation and quotes omitted). See also Mohamad v.
Palestinian Auth., 132 S. Ct. 1702, 1709 (2012) (recognizing
that although “Congress is understood to legislate against a
background of common-law adjudicatory principles,”
“Congress plainly can override those principles,” through, for
example, statutory text that evinces a clear intent to the
contrary (citation and quotes omitted)). Here, there is no
question that subrogation is a well-settled principle. See Am.
Surety, 314 U.S. at 317. But, in this case, the presumption in
favor of subrogation does not apply under CERLCA section
107(a) because there is clear congressional intent to the
contrary, as evident from the statutory text of section 107(a);
its interaction with section 112(c), which “speak[s] directly”
to the issue of subrogation,” Mobil Oil Corp. v.
 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL 21

Higginbotham, 436 U.S. 618, 625 (1978); and CERCLA’s
overall statutory purpose.

We first turn to the statutory text of section 107(a) to
discern congressional intent. Section 107(a) of CERCLA
imposes strict liability on four categories of PRPs for the
cleanup of environmental hazards, irrespective of whether
they directly contributed to the contamination. Team Enters.,
647 F.3d at 907 & n.2; 42 U.S.C. § 9607(a). “Once an entity
is identified as a PRP, it may be compelled to clean up a
contaminated area or reimburse the Government for its past
and future response costs.” Burlington N., 556 U.S. at 609.
Section 107(a)(4) provides that PRPs are liable for

(A) all costs of removal or remedial action
incurred by the United States Government or
a State or an Indian tribe not inconsistent with
the national contingency plan;

(B) any other necessary costs of response
incurred by any other person consistent with
the national contingency plan . . . .

42 U.S.C. § 9607(a)(4).

Section 107(a) states that PRPs are liable for “necessary
costs of response incurred,” which are “consistent with the
national contingency plan.” 42 U.S.C. § 9607(a)(4)(B).
Here, because CERCLA clearly defines the key terms
“response” and “national contingency plan,” we apply the
statutory definitions. Stenberg, 530 U.S. at 942. The statute
defines “response” as “remove, removal, remedy, and
remedial action,” along with related enforcement activities.
42 U.S.C. § 9601(25). “The terms ‘remove’ or ‘removal’
22 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL

mean the cleanup or removal of released hazardous
substances from the environment,” 42 U.S.C. § 9601(23), and
the terms “remedy” or “remedial action” mean “those actions
consistent with permanent remedy taken instead of or in
addition to removal actions in the event of a release or
threatened release of a hazardous substance into the
environment, to prevent or minimize the release of hazardous
substances. . . ,” 42 U.S.C. § 9601(24). Response costs are
deemed “necessary” when “ ‘an actual and real threat to
human health or the environment exist[s].’ ” City of Colton
v. Am. Promotional Events, Inc.-W., 614 F.3d 998, 1003 (9th
Cir. 2010) (quoting Carson Harbor I, 270 F.3d at 871).
Because the statute does not define “incur,” and there is no
controlling authority on the term in the CERCLA context, we
apply the ordinary meaning, which is “[t]o acquire or come
into,” “[t]o become liable or subject to as a result of one’s
action,” to “bring upon oneself.” Am. Heritage Dictionary
(4th ed. 2000). Moreover, the response cost must be
consistent with the “national contingency plan” (NCP), which
outlines specific steps for preparing and responding to
contaminations that have been promulgated by the EPA under
CERCLA section 105, and was “designed to make the party
seeking response costs choose a cost-effective course of
action to protect public health and the environment.” City of
Colton, 614 F.3d at 1003 (citation and quotes omitted).
“Private party remedial action is ‘consistent with the [NCP]
if the action, when evaluated as a whole, is in substantial
compliance with . . . [certain procedural requirements], and
results in a CERCLA-quality cleanup.’ ” Caron Harbor II,
433 F.3d at 1265 (quoting 40 C.F.R. § 300.700(c)(3)(i)).

Applying these definitions, section 107(a) plainly applies
to a person who, through his or her own actions, becomes
statutorily liable for, or is subject to, the costs related to the
 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL 23

cleanup of hazardous substances or the permanent
remediation of a release or threatened release of hazardous
substances into the environment in a manner consistent with
the NCP. Here, Chubb only alleges that Taube-Koret, by
virtue of its ownership of the San Antonio Road properties,
became statutorily liable under CERCLA for the response
costs related to the cleanup of the contaminated soil on those
properties. Chubb does not dispute that the TAC lacks any
allegation that Chubb, by any independent action of its own
or by ownership of Taube-Koret’s property, became liable for
those response costs under CERLCA. Chubb only alleges
that by virtue of reimbursing Taube-Koret under its Policy, it
became subrogated to Taube-Koret’s right to pursue a section
107(a) claim. But a subrogee—simply by stepping into the
shoes of the insured via a reimbursement—cannot be liable
for response costs under CERLCA, and thus cannot itself
incur response costs. See 42 U.S.C. § 9607(e)(1) (“No
indemnification . . . shall be effective to transfer from the
[PRP] . . . to any other person the liability imposed under this
section.”). Here, Chubb did not become statutorily liable for
Taube-Koret’s response costs under CERCLA, but only
contractually responsible for those costs pursuant to the terms
of an independent insurance policy. Chubb reimbursed
Taube-Koret for those costs after the completion of the
cleanup by Taube-Koret, and after the bill for the cleanup was
already paid by Taube-Koret. In essence, an insurer that is
only obligated to reimburse the insured for cleanup costs does
not itself incur response costs. See United States v. Atl.
Research Corp., 551 U.S. 128, 139 (2007) (observing that
“by reimbursing response costs paid by other parties, the PRP
has not incurred its own costs of response and therefore
cannot recover under § 107(a)”). Chubb cannot circumvent
the plain meaning of section 107(a) by piggybacking on a
subrogation principle under state law, which the plain
24 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL

language of section 107(a) does not support, or by inscribing
a broader subrogation right by contract. See Century Indem.
Co. v. London Underwriters, 12 Cal. App. 4th 1701, 1708
(1993) (“[T]he insurer has the legal right to place subrogation
agreements in their policies so long as they do not contravene
applicable statutes.”). The requirement that a party incur
response costs itself also makes sense because that party is
ultimately liable for the cleanup and remains liable for any
subsequent pollution. In contrast, an insurer such as Chubb
does not assume liability for CERCLA cleanups as a PRP,
and thus should not have a one-sided right to pursue
subrogated claims to recoup insurance payments. See
42 U.S.C. § 9607(e)(1); infra Part A(5).

Our reading of section 107(a) is consistent with our
CERCLA jurisprudence. Although there is no controlling
authority on the issue of whether an insurer may bring a
subrogated cost-recovery claim under section 107(a), we have
consistently tracked the express language of section 107(a) in
defining the scope of that provision.8

8
See, e.g., Carson Harbor II, 433 F.3d at 1265 (defining section 107(a)
as permitting “private parties who incur cleanup costs to recover those
costs from ‘various types of persons who contributed to the dumping of
hazardous waste at a site.’ ” (quoting Ascon Props., Inc. v. Mobil Oil Co.,
866 F.2d 1149, 1152 (9th Cir. 1989)); Carson Harbor I, 270 F.3d at
870–71 (stating that to establish a prima facie case of liability under
section 9607(a), the plaintiff must show, inter alia, that “a release or
threatened release” of hazardous substances from a facility “has caused
the plaintiff to incur response costs that were necessary and consistent
with the national contingency plan” (citations and quotes omitted)); 3550
Stevens Creek Assocs. v. Barclays Bank of Cal., 915 F.2d 1355, 1358 (9th
Cir. 1990) (same); City of Colton, 614 F.3d at 1002–03 (same); Kotrous
v. Goss-Jewett Co. of N. Cal., 523 F.3d 924, 929 (9th Cir. 2008)
(“CERCLA § 107(a) authorizes suits against certain statutorily defined
responsible parties to recover costs incurred in cleaning up hazardous
 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL 25

Nevertheless, in support of its position, Chubb relies on
the Supreme Court’s recent analysis in United States v.
Atlantic Research Corp., 551 U.S. 128 (2007), concerning the
relationship between CERCLA sections 107(a) and 113(f).
Amicus Chartis Specialty Insurance Company (Chartis) also
contends that Atlantic Research opens the door wide for any
person to commence litigation to recover cleanup costs
against other PRPs. But Atlantic Research actually
undermines, not supports, Chubb’s and Chartis’s position. In
that case, Atlantic Research Corporation, a lessee of a facility
operated by the Department of Defense, retrofitted rocket
motors for the United States, and contaminated the soil and
groundwater on its site. Atl. Research, 551 U.S. at 133.
Atlantic Research cleaned up the site at its own expense and
then sought to recover some of the costs by suing the United
States under section 107(a). Id. The United States moved to
dismiss on the ground that section 107(a) does not allow
PRPs, such as Atlantic Research, to recover costs under that
provision. Id. at 133–34. The district court dismissed the
action, and the Eighth Circuit reversed. Id. at 134.

The issue before the Supreme Court was whether section
107(a) provides PRPs with a cause of action to recover from
other PRPs, separate and distinct from section 113(f)(1),
which authorizes one PRP to sue another for contribution (1)
during or following a civil action under section 106 or 107(a)
and (2) after private parties have settled their liability with the
Government, 42 U.S.C. § 9613(f)(3)(B). Id. at 131, 132 n.1.
More specifically, the parties’ dispute centered on what
“other person[s]” may sue under section 107(a)(4)(B). Id. at

waste disposal sites.” (citations and quotes omitted)). There is no
indication of a broader understanding of section 107(a) beyond the express
language of the statute.
26 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL

134. Applying the maxim that statutes must “be read as a
whole,” the Court determined that the express language of
section 107(a), read in its context, permits PRPs to bring
section 107(a) claims against other PRPs. Id. at 135, 141.
Reading the adjacent subparagraphs (A) and (B) of section
107(a) together and noting their structural similarity, the
Court interpreted “any other person” to mean any person
other than the U.S. Government, a state, or an Indian Tribe.
Id. at 135–36. The Court observed that each subdivision
under section 107(a) “concerns certain costs that have been
incurred by certain entities and that bear a specified
relationship to the national contingency plan.” Id. at 135.
The Court concluded that “the plain language of
subparagraph (B) authorizes cost-recovery actions by any
private party, including PRPs.” Id. at 136.

Chubb argues that the Court’s reading of “any other
person” under section 107(a) supports its position that
insurance companies, too, should be included as a party under
that provision. However, the Court’s interpretation of “any
other person” under 107(a) is limited to “a private party that
has itself incurred cleanup costs.” Id. at 139 (emphasis
added). The Court made the express distinction that, in
contrast to section 113(f)(1), section 107(a) “permits a PRP
to recover only the costs it has ‘incurred’ in cleaning up a
site.” Id. (emphasis added) (quoting 42 U.S.C.
§ 9607(a)(4)(B)). In contrast, “[w]hen a party pays to satisfy
a settlement or a court judgment, it does not incur its own
costs of response. Rather, it reimburses other parties for costs
that those parties incurred.” Id. When a PRP “pays money
to satisfy a settlement agreement or a court judgment,” it
“may pursue § 113(f) contribution,” but “by reimbursing
response costs paid by other parties, the PRP has not incurred
its own costs of response and therefore cannot recover under
 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL 27

§ 107(a).” Id. (emphasis added). “As a result, though
eligible to seek contribution under § 113(f)(1), the PRP
cannot simultaneously seek to recover the same expenses
under section 107(a).” Id. The Court’s reading of the two
provisions therefore allowed for complementary causes of
action to persons in different procedural circumstances. Id.

While the Supreme Court examined section 107(a) as it
specifically intersects with section 113(f), the Court’s
distinction between a response cost and reimbursement may
be applied to clarify the proper scope of section 107(a) in
relation to section 112(c). Under the Court’s ruling, Taube-
Koret, as a PRP, may seek contribution against other PRPs
under section 107(a) if it voluntarily cleans up the
environmental hazard. But the Court’s ruling does not
authorize a private party who has only incurred
reimbursement costs, such as Chubb, to file suit under that
provision. Just as a PRP “has not incurred its own costs of
response,” by reimbursing other parties’ response costs,
Chubb has not incurred response costs solely by virtue of
reimbursing Taube-Koret for Taube-Koret’s response costs
under an insurance policy.

In support of their position, Chubb and Chartis also rely
on Karras v. Teledyne Industries, Inc., 191 F. Supp. 2d 1162
(S.D. Cal. 2002), and Basic Management, Inc. v. United
States, 569 F. Supp. 2d 1106 (D. Nev. 2008). But these cases
are neither binding on this court nor apposite, and in fact,
only undercut their argument. In Karras, the district court
held that the plaintiff Trusts incurred response costs
necessary to maintain a contribution action under section 113
because it contractually assumed the duty to clean up the
polluted site and performed the actual cleanup. 191 F. Supp.
at 1170. In contrast, Chubb did not engage in any of the
28 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL

remediation activities itself, and the Policy it issued Taube-
Koret was not executed for the purpose of cleaning up a
polluted site. Rather, the Policy insures Taube-Koret against
the risk of liability and provides for environmental cleanup
costs it could potentially incur on its property. Chartis also
relies on Basic Management, but in that case, corporate PRPs
brought a suit for direct recovery and contribution against the
government under sections 107(a) and 113(f) to recover a
portion of remediation costs. Basic Management, 569 F.
Supp. at 1112. The district court determined that plaintiffs
had not incurred response costs because, under the insurance
policy, the insurer “pays the vendors directly and is obligated
to do [so] in the future,” in connection with remediation
activities. Id. at 1120, 1121. Enabling plaintiff PRPs to
obtain contribution in such circumstances would also lead to
double recovery, which is barred under CERCLA. Id. at
1123. Here, in contrast, Chubb does not allege that it directly
paid for response costs related to the removal and remediation
activities on the San Antonio Road properties; rather, it only
alleges that it reimbursed Taube-Koret after completion of the
cleanup.9

Accordingly, the statutory text of section 107(a) does not
support an application of subrogation under that provision.
The express language of section 107(a), as interpreted by the
Supreme Court and this circuit, is inconsistent with reading
that provision as permitting a type of derivative incurment of

9
Chubb additionally argues, without support, that prohibiting a
subrogation claim under section 107(a) impairs its right to private contract
under the Due Process Clause of the Fifth Amendment by nullifying its
contractual subrogation rights. Chubb is mistaken. CERCLA expressly
provides for subrogation under section 112(c), and does not foreclose
subrogation claims under state law. See 42 U.S.C. §§ 9672(a), 9607(e).
 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL 29

response costs through subrogation. Because “[i]t is our
function to give the statute the effect its language suggests,
however modest that may be,” Morrison v. Nat’l Austl. Bank,
Ltd., 130 S. Ct. 2869, 2886 (2010), we conclude that Chubb
lacks standing to sue under section 107(a) because it has not
itself become statutorily liable for response costs under
CERCLA.

4. Statutory Scheme

Because we must review the words of a statute “in their
context and with a view to their place in the overall statutory
scheme,” Davis v. Mich. Dep’t of Treasury, 489 U.S. 803,
809 (1989), we next examine the interaction of section 107(a)
within the context of CERCLA’s remedial
scheme—specifically, its interaction with section 112(c)—to
further determine Congress’s intent. In dismissing Chubb’s
section 107(a) claim, the district court concluded that
allowing Chubb to bring a claim under section 107(a) would
thwart the remedial scheme under CERCLA because doing so
would render “§ 112(c) a nullity.” The district court’s ruling
accords with the rules of statutory interpretation and the
Supreme Court’s analysis in Atlantic Research.

In interpreting statutes, we observe the “cardinal principle
of statutory construction that a statute ought, upon the whole,
to be so construed that, if it can be prevented, no clause,
sentence, or word shall be superfluous, void, or insignificant.”
TRW Inc. v. Andrews, 534 U.S. 19, 31 (2001) (citation and
quotes omitted); United States v. Tohono O’Odham Nation,
131 S. Ct. 1723, 1730 (2011) (“Courts should not render
statutes nugatory through construction.”). Applying this
principle, one district court within our circuit addressed the
issue of whether an insurer may recover insurance payments
30 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL

under section 107(a). See Cal. Dep’t of Toxic Substances
Control v. City of Chico, 297 F. Supp. 2d 1227 (E.D. Cal.
2004). In that case, an insurance company filed suit against
PRPs under CERCLA section 107(a) after expending funds
in connection with the remediation of a hazardous waste site.
Id. at 1231. The insurer asserted a claim under section 107(a)
to recover its insurance payment, arguing that “any other
person” under the statute means “any person who has
incurred response or remedial costs, including a liability
insurer.” Id. at 1232. The district court rejected this
argument, concluding that permitting insurers to sue under
section 107(a) would render CERCLA’s subrogation
provision under section 112(c) “nugatory.” Id. at 1233. We
agree.

Section 112(c) permits an insurer like Chubb to file a
subrogation action for reimbursement of costs from PRPs, so
long as it complies with the statutory requirements, including
the requirement that Taube-Koret be a “claimant.” 42 U.S.C.
§ 9612(c)(2). Enabling Chubb, as Taube-Koret’s subrogee,
to proceed under section 107(a) for reimbursement of its
insurance payment is far broader than what is contemplated
under section 112(c), and therefore would impermissibly
swallow—not complement—the subrogation provision. Such
an effect is distinct from merely a minor overlap in statutory
provisions. When given a choice, parties would undoubtedly
choose to pursue a subrogated action under section 107(a),
which does not include the “claimant” requirement, thereby
rendering section 112(c) meaningless. In other words, if
Congress had contemplated permitting equitable subrogation
under section 107(a), there would have been no purpose in
enacting a separate, narrower subrogation provision under
112(c), because, in this case, for example, Chubb would have
been able to proceed under both sections 107(a) and 112(c)
 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL 31

regardless of whether Taube-Koret had made a claim. It is a
well-established rule of statutory construction that courts
should not interpret statutes in a way that renders a provision
superfluous. See Tohono O’Odham Nation, 131 S. Ct. at
1730; Atlantic Research, 551 U.S. at 137 (noting that it is
inappropriate to “adopt a textually dubious construction that
threatens to render the entire provision a nullity”); Solimino,
501 U.S. at 111–12 (rejecting application of preclusion, a
common law principle, to a federal statute because applying
the principle would render a section superfluous). In contrast
to the reading urged by Chubb, the Court’s interpretation of
sections 107(a) and 113(f) in Atlantic Research allows for
complementary remedies because it permits different
remedial schemes (i.e., direct recovery and contribution)
under distinct procedural circumstances, thus obviating the
nullifying effect of Chubb’s interpretation of section 107(a).
See Atl. Research, 551 U.S. at 139.10

Chartis counters that a subrogation claim is expressly
contemplated under CERCLA section 107(e)(2). But
Chartis’s argument is not supported by the plain language of
that provision. Section 107(e)(2) provides that “[n]othing in
this subchapter . . . shall bar a cause of action that an owner
or operator or any other person subject to liability under this
section, or a guarantor, has or would have, by reason of
subrogation or otherwise against any person.” 42 U.S.C.
§ 9607(e)(2). A “guarantor” is “any person, other than the
owner or operator, who provides evidence of financial
responsibility for an owner or operator under this chapter.”
42 U.S.C. § 9601(13). A related statutory provision suggests

10
Additionally, the fact that City of Chico was decided before Atlantic
Research and Kotrous does not affect its structural analysis, which
remains sound.
32 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL

that a “guarantor” includes insurers. See 42 U.S.C.
§ 9608(d)(1) (“The total liability of any guarantor in a direct
action suit brought under this section shall be limited to the
aggregate amount of the monetary limits of the policy of
insurance, guarantee, surety bond, letter of credit, or similar
instrument obtained from the guarantor by the person subject
to liability under section 9607. . . .” (emphasis added)). But
irrespective of whether an insurance company qualifies as a
“guarantor,” section 107(e)(2) simply clarifies that nothing in
CERCLA shall “bar,” i.e., operate as an impediment to the
assertion of proper subrogation claims. This is consistent
with the district court’s acknowledgment that subrogation
claims are not foreclosed to Chubb, as long as they are
brought in a manner authorized by the law, such as under
section 112(c) and relevant state law claims. Thus, while
CERLCA does not bar subrogation claims under specified
conditions or pursuant to state law, this does not mean that
section 107(e)(2) creates a separate right to bring a
subrogated action under section 107(a).

The Dissent nevertheless maintains that equitable
subrogation should be permitted under section 107(a) because
there is no showing that Congress intended statutory
subrogation under section 112(c) to be exclusive, and because
there is no showing that Congress intended to eliminate
consideration of equitable subrogation. But while CERCLA
does not expressly proscribe equitable subrogation under
section 107(a), it need not do so to evidence congressional
intent. Texas, 507 U.S. at 534. Congress’s statutory intent
against subrogation under section 107(a) is made abundantly
clear by the plain language of section 107(a); its statutory
scheme vis-à-vis section 112(c), which “speak[s] directly” to
the issue of subrogation, Mobil Oil, 436 U.S. at 625; and
considerations of CERCLA’s purpose, see infra Part A(5).
 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL 33

By contrast, in United States v. Bestfoods, 524 U.S. 51, 62–64
(1998), the Supreme Court held that a parent corporation may
be held derivatively liable under section 107(a) of CERCLA
where the corporate veil is pierced because CERCLA does
not speak to this specific common law principle. Likewise,
we recognized that CERCLA does not address the particular
issue of successor liability, and thus applied traditional rules
of successor liability under CERCLA. See Atchison, Topeka
& Santa Fe Ry. Co. v. Brown & Bryant, Inc., 159 F.3d 358,
362–64 (9th Cir. 1997). While CERCLA is silent as to issues
of piercing the corporate veil and successor liability,
however, it is not silent on the issue of subrogation: Congress
implicitly conveyed the intent, through the plain language of
section 107(a), that a derivative incurment of response costs
was not contemplated under section 107(a), and also
expressly conveyed this purpose by enacting a separate
subrogation provision under section 112(c), which would be
rendered superfluous by permitting a subrogation suit under
section 107(a). See Mohamad, 132 S. Ct. at 1706–09
(declining to apply the common law principle of
organizational liability in tort actions to the meaning of an
“individual” in a federal statute because the statute’s text and
scheme evinced a clear intent to the contrary). Moreover,
both Bestfoods and Atchison dealt with the extension of
liability under common law principles to certain entities
under CERCLA, not with who has standing to pursue an
action under section 107(a). In contrast to an application of
subrogation to section 107(a), neither the application of
piercing the corporate veil nor successor liability to CERCLA
is constrained by any express statutory requirement, such as
the requirement that the suing party incur response costs, or
by any other statutory provision.
34 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL

5. Statutory Purpose and Public Policy11

Because Chubb did not allege that Taube-Koret was a
claimant, as expressly defined by CERCLA, it is precluded
from bringing a subrogation action under section 112(c).
Further, both the plain statutory language and overall scheme
of CERCLA indicate that an insurer cannot bring a
subrogation action under section 107(a) when it has not itself
incurred response costs. As the Supreme Court has observed,
“[g]iven the clear meaning of the text, there is no need . . . to
consult the purpose of CERCLA at all,” as “ ‘it is ultimately
the provisions of our laws rather than the principal concerns
of our legislators by which we are governed.’ ” Cooper
Industries, 543 U.S. at 167 (quoting Oncale v. Sundowner
Offshore Servs., Inc., 523 U.S. 75, 79 (1998)); see also
United States v. Aerojet Gen. Corp., 606 F.3d 1142, 1151 (9th
Cir. 2010) (declining to be persuaded by policy arguments
where CERCLA statutory provisions are unambiguous).
Nevertheless, given the complexity of CERCLA, we consult
statutory purpose to see if the plain text of 107(a) and 112(c)
clearly is inconsistent with congressional intent or leads to
absurd results.

11
As we have done previously, we primarily look to the overall statutory
scheme and the purposes animating CERCLA to determine congressional
intent, rather than the legislative history materials. Hearthside
Residential, 613 F.3d at 914 n.4. This is because, although we “review the
legislative history to ensure that there is no clearly contrary congressional
intent,” Carson H arbor I, 270 F.3d at 884, “the direct evidence of
CERCLA’s legislative history includes ‘few truly relevant documents,’
perhaps because of the last-minute compromise that resulted in a ‘hastily
assembled’ final bill,” Hearthside Residential, 613 F.3d at 914 n.4
(quoting Carson Harbor I, 270 F.3d at 885 & nn.13–14).
 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL 35

“Our court construes CERCLA liberally to effectuate the
statute’s two primary goals: (1) to ensure the prompt and
effective cleanup of waste disposal sites, and (2) to assure
that parties responsible for hazardous substances [bear] the
cost of remedying the conditions they created.” City of Los
Angeles v. San Pedro Boat Works, 635 F.3d 440, 447 (9th
Cir. 2011) (citation and quotes omitted). Chubb and Chartis
advance two main public policy arguments.

First, Chubb and Chartis argue that affirming the district
court’s decision would make it more difficult for insurers to
access remedies under CERCLA. This would risk the
winnowing of insurance products offered, leaving some
markets unserved or underserved. The net result, they argue,
would be a decrease in the overall insurance money available
to cover remediation costs under CERCLA. This, in turn,
undermines the purpose of CERCLA to facilitate prompt
cleanup of hazardous sites.

We find this argument unpersuasive. As a preliminary
matter, we emphasize that subrogation actions are not
foreclosed to insurers like Chubb. Insurers may still avail
themselves of statutory subrogation pursuant to section
112(c) and under relevant state law, as long as they comply
with specified requirements. Moreover, there is no
evidence—and Chubb and Chartis have furnished none—that
Congress contemplated funding of environmental cleanups
through insurance money. CERCLA establishes a trust fund,
commonly known as “Superfund,” which is financed through
taxes on certain chemicals and by general revenues. Exxon
Corp. v. Hunt, 475 U.S. 355, 359 (1986), superseded by
statute on other grounds as stated in Manor Care, Inc. v.
Yaskin, 950 F.2d 122, 125 (3d Cir. 1991). Under certain
conditions, the federal government may use the Superfund to
36 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL

finance cleanup efforts, which it may then replenish by filing
suits against PRPs under section 107(a). See Bestfoods,
524 U.S. at 55; 42 U.S.C. §§ 9601(11), 9604; 26 U.S.C.
§ 9507. Alternatively, the federal government can issue an
order directing the PRPs to finance and clean up the site.
42 U.S.C. § 9606(a); see also Pakootas v. Teck Cominco
Metals, Ltd., 452 F.3d 1066, 1072–73 (9th Cir. 2006)
(discussing the four methods by which the EPA ensures the
prompt cleanup of hazardous waste sites). PRPs may then
seek direct recovery or contribution from other PRPs under
sections 107(a) and 113(f), respectively. A PRP, which is the
subject of a cleanup order, such as Taube-Koret, may have
abated its risk through an environmental insurance policy, but
it is ultimately responsible for financing and cleaning up the
polluted site. Insurance companies generally do not
themselves pay for the cleanup costs as they are incurred, but
only after its completion and after a claim is made. This is
what Chubb alleges happened in this case. Thus, it does not
follow that the availability of insurance money expedites
cleanup activities.

Furthermore, there is no evidence that insurance
companies rely on the availability of CERCLA remedies in
issuing environmental policies. Nor is there evidence that
insurers depend on CERCLA recoveries to stay in business.
An insurer’s business and growth depends on the collection
of premiums and the small likelihood of paying claims, rather
than recovery through lawsuits. See Gerrish Co. v. Univ.
Underwriters Ins. Co., 947 F.2d 1023, 1028 (2d Cir. 1991)
(“[W]hen the insurer issues a policy and accepts payment for
insurance coverage under that policy, the insurer agrees to
assume the risks enunciated in the policy.”); Richardson v.
GAB Bus. Servs., Inc., 161 Cal. App. 3d 519, 523 (1984)
(“Essential to insurance is the element of shifting of the risk
 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL 37

of loss, subject to contingent or future events, by a legally
binding agreement.”); 42 U.S.C. § 9671(1) (defining
insurance as an “arrangement for shifting and distributing risk
which is determined to be insurance under applicable State or
Federal law”).

Here, Chubb assumed the risk that it would have to pay
on the Policy and received premium payments (totaling
nearly $200,000) to compensate it for assuming that risk.12
Additionally, at present, despite the apparent paucity of cases
in which insurers have successfully brought a subrogation
claim under section 107(a), the market for environmental
insurance companies appears to be robust and growing. See
William Pritchard Jr., Pollution Solution, American Agent &
Broker (Feb. 2011) (observing that from 1990 to 2010, the
number of companies offering environmental insurance
products jumped from four to forty, amounting to a thousand
percent growth over twenty years); David J. Dybdhal,
Environmental Risks and Insurance Market Place Update,
American Risk Management Resources Network (March

12
The Dissent argues, however, that “in the long run,” insurers cannot
be expected to indemnify companies for environmental cleanups without
charging a premium reflecting the risk of monetary loss, and that “risk will
necessarily increase if the insurer cannot seek contribution from prior
polluters and property owners.” This will, in turn, discourage or delay
cleanups, and thus undermine CERCLA’s purpose. But the Dissent’s
argument assumes that section 107(a) is the only means by which
insurance companies can recover its insurance payments. That is clearly
not the case, as we repeatedly emphasize in this opinion. Insurers may
assert both section 112(c) and state law subrogation claims under certain
conditions. Moreover, the Dissent acknowledges that insurers need not
increase insurance premiums, but have the alternative option of
conditioning payment on a prior claim by the insured against other
contributors of the pollution. As we discuss in this section, that is exactly
what CERCLA section 112(c) calls for, and for good reasons.
38 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL

2009) (reporting that the environmental insurance market
place continues to experience exceptional organic growth
rates averaging between ten and fifteen percent annually, in
contrast to the three percent underlying organic growth rate
of the traditional property and liability insurance market),
available at http://www.armr.net/EnvMar3-2009.pdf. Thus,
the risk of winnowing insurance products appears
unsubstantiated.

Second, Chubb and Chartis argue that conditioning a
section 112(c) claim on whether the insured has made a claim
to either the Superfund or other PRPs places further
unnecessary roadblocks that prevent an insurer from
perfecting its right to pursue other PRPs for response costs.
This not only slows down the remediation process, but also
enables actual polluters to receive an undeserved free pass,
simply because the remediation costs were paid by the
insurance company.

This argument fares no better than the first. It could be
argued, as does the Dissent, that placing limits on a broad
subrogation right under CERCLA would encourage insurance
companies to rewrite their policy and explicitly condition
insurance payments on whether the insured brings suit or
makes a claim. According to the Dissent, this would
discourage or delay cleanup. But as a preliminary matter,
Congress did not contemplate that insurance money would be
the catalyst for cleanups. Indeed, it is completely beside the
point since CERCLA ensures the prompt cleanup of
hazardous sites through four options given to the EPA: (1) it
can investigate and remediate the polluted site itself and later
seek recovery of response costs from PRPs, 42 U.S.C.
§§ 9604, 9607; (2) it can initiate settlement negotiations with
PRPs, 42 U.S.C § 9622; (3) it can file suit in federal district
 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL 39

court to compel PRPs to abate an “imminent and substantial”
threat to public health or welfare, 42 U.S.C. § 9606(a); or (4)
it can issue cleanup orders to PRPs, 42 U.S.C. § 9606(a).
Pakootas, 452 F.3d at 1072–73. Here, the alleged cleanup of
the San Antonio Road properties by Taube-Koret was
prompted by the Water Board’s orders, not its Policy with
Chubb. If a PRP, such as Taube-Koret, receives a cleanup
order and refuses to comply, then CERLCA provides for
certain enforcement options. For example, the EPA may
initiate the cleanup of the facility itself, and the party
responsible for the pollution is potentially liable for cleanup
costs. Id. at 1073; 42 U.S.C. § 9604. Alternatively, the EPA
may bring suit to compel compliance, using the contempt
powers of the district court to impose potential sanctions for
non-compliance. Pakootas, 452 F.3d at 1073; 42 U.S.C.
§ 9606(a). The EPA may further bring suit seeking to impose
fines up to $25,000 for each day the party fails to comply
with the order. Pakootas, 452 F.3d at 1073; 42 U.S.C.
§ 9606(b)(1). A PRP who refuses to comply with a cleanup
order without sufficient basis may also be liable to the
government for punitive damages in an amount equal to three
times the cost incurred by the Superfund for the cleanup.
42 U.S.C. § 9607(c)(3). This would prompt recalcitrant PRPs
to cooperate and would deter insurance companies from
writing policy provisions that slow down the cleanup process.

While Chubb and Chartis contend that the condition
precedent under section 112(c) would thwart CERCLA’s
purpose, the opposite is true. Requiring PRPs to first seek
claims from the Superfund or other PRPs, instead of resorting
to insurance money, ensures that PRPs are identified and held
accountable for cleanups. PRPs are in a better position to
locate and identify other PRPs because they are more
knowledgeable about the polluting site and engage in the
40 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL

cleanups themselves, rather than insurance companies who
are detached from the property and are not involved in the
remediation activities. This furthers CERCLA’s goal of
making polluters pay for cleanup costs. Making polluters
pay, in turn, frees up, not reduces, the available insurance
money for remediation. Additionally, requiring the insured
to pursue a claim before a subrogation right vests under
section 112(c) would not be unduly burdensome or have a
slowing effect on cleanups of polluted sites. Insurance
companies may write their policies in a way as to require
reasonable cooperation from their insureds. In the Policy at
issue, for example, Taube-Koret already had a duty “to
cooperate and otherwise offer [Chubb] reasonable assistance
in the defense, investigation or settlement of a claim.”

Moreover, not permitting an equitable subrogation action
under section 107(a) and requiring the insured to make a
claim before an insurer can pursue a section 112(c) claim
does not give a “free pass” to actual polluters. The issue here
is not whether liable parties or actual polluters are given a
free pass, but whether insurers may pursue a CERCLA claim
under 107(a) and 112(c) without having incurred response
costs and without its insured first making a claim.
Defendants’ liability has not yet been proven. Nor has
Taube-Koret or anyone else other than Chubb ever alleged,
let alone proven, that any of the Defendants is a responsible
party for the contamination on Taube-Koret’s property. And,
as previously noted, actual polluters do not necessarily
receive a free pass because insurers may pursue subrogation
claims under section 112(c) and state law.

There are further countervailing policy arguments that
counsel against an expansive reading of sections 107(a) and
112(c). Aside from the timely cleanup of polluted sites and
 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL 41

imposing liability on responsible parties, “[o]ne of the core
purposes of CERCLA is to foster settlement through its
system of incentives and without unnecessarily further
complicating already complicated litigation.” City of Chico,
297 F. Supp. 2d at 1235; see also In re Cuyahoga Equip.
Corp., 980 F.2d 110, 119 (2d Cir. 1992) (“Congress sought
through CERCLA . . . to encourage settlements that would
reduce the inefficient expenditure of public funds on lengthy
litigation.”); City of Emeryville, 621 F.3d at 1264 (noting that
CERCLA was designed to ensure, inter alia, “that settlements
are encouraged through specified contribution protection”);
42 U.S.C. § 9622. Under section 113(f)(2), “[a] person who
has resolved its liability to the United States or a State in an
administrative or judicially approved settlement shall not be
liable for claims for contribution regarding matters addressed
in the settlement.” 42 U.S.C. § 9613(f)(2). If section 107(a)
were interpreted broadly to authorize subrogation actions, an
insurer could circumvent this provision for contribution
protection by suing settling PRPs for cost recovery, thereby
eviscerating the incentive for early settlement and causing a
proliferation of cost-recovery suits by insurance companies.

Moreover, enabling insurance companies to sue in
subrogation under section 107(a) or section 112(c),
irrespective of whether the insurer has incurred response costs
or the insured has made a claim, creates perverse incentives.
It would encourage insurance companies to sue third parties
who may or may not be liable for the release of contaminants
in the hopes of getting a settlement from those who would
rather settle than engage in expensive litigation. It could also
create a windfall for insurance companies, since they would
not only receive premium payments, but also potentially
lucrative recoveries from CERCLA actions.
42 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL

Finally, allowing insurers the benefit of a broad
subrogation right under section 107(a) or 112(c) would be
fundamentally unfair because while CERCLA does not bar an
insurer from recouping insurance payments through
subrogation, it prohibits a contractual assignment of liability.
See 42 U.S.C. § 9607(e)(1) (“No indemnification . . . shall be
effective to transfer from the [PRP] . . . to any other person
the liability imposed under this section.”). Chubb thus would
reap the benefits of Taube-Koret’s rights without remaining
liable under CERCLA for any future violation or continuing
remediation. This scheme facilitates the business of
insurance companies, rather than ensuring that responsible
parties pay for environmental cleanups.

In sum, after reviewing the statutory language, remedial
scheme, and purpose of CERCLA, along with relevant case
law, we hold that an insured must first make a claim to either
the Superfund or a potentially liable party before an insurer
can bring a subrogation action under section 112(c). We
further hold that section 107(a) of CERCLA does not
authorize an insurer to assert a subrogation claim under that
provision to recover insurance payments when it did not
directly incur environmental response costs. The plain
statutory language of section 107(a) and its interaction with
section 112(c), which directly speaks to the issue of
subrogation, indicate that Congress did not contemplate
equitable subrogation under section 107(a). Permitting
subrogation suits through an expansive reading of section
107(a) and 112(c) would thwart, not promote, CERCLA’s
purpose and the interests of public policy.
 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL 43

B. Chubb’s State Law Claims13

Chubb asserts subrogated state law claims under the
California Health and Safety Code and under negligence per
se and strict liability tort theories. The district court
dismissed Chubb’s state law claims as time-barred under
section 338(b) of the California Code of Civil Procedure,
which provides for a three-year limitations period for “[a]n
action for trespass upon or injury to real property.” The
statute of limitations for injury to property begins to run when
the injury to the property occurs. CAMSI IV v. Hunter Tech.
Corp., 230 Cal. App. 3d 1525, 1534 (1991). This limitation
period applies “regardless of the theory upon which relief is
sought.” Auto. Ins. Co. v. Union Oil Co., 85 Cal. App. 2d
302, 307 (1948). The parties do not contest that section
338(b) applies to Chubb’s state law claims. Rather, the
dispute turns on when the limitations period begins, and
whether, on the facts alleged in the TAC, the district court
properly dismissed Chubb’s state law claims.

1. The Accrual Period under Section 338(b)

Chubb challenges the district court’s determination that
the limitations period under section 338(b) “commences to

13
As a preliminary matter, Chubb’s argument that the district court
applied an incorrect legal standard in dismissing its state law claims is
without merit. Chubb does not take issue with the Rule 12(b)(6) standard
articulated under Twombly and Iqbal, which the district court applied in
dismissing the TAC and Chubb cites in its brief. The district court
concluded that Chubb’s state law claims were time-barred under the
alleged facts in the TAC. This decision was based on a proper application
of Rule 12(b)(6), and did not involve impermissible findings of fact.
44 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL

run when the plaintiff knows, or should have known, of the
wrongful conduct at issue.” Angeles Chem. Co. v. Spencer &
Jones, 44 Cal. App. 4th 112, 119 (1996). Because Chubb has
not suffered an injury itself, but instead is asserting the claims
of Taube-Koret in subrogation, the limitations period began
to run when Taube-Koret knew, or should have known, of the
wrongful conduct—i.e., the release of hazardous substances
on its San Antonio Road properties. See Auto. Ins. Co.,
85 Cal. App. 2d at 305 (“[I]t seems only fair, right, just and
equitable that one who is subrogated to the rights and
remedies of another should be allowed the same time in
which to enforce such rights that the law would have allowed
to the person to whose rights and remedies he succeeds.”);
Emp’rs Ins. of Wausau v. Granite State Ins. Co., 330 F. 3d
1214, 1217 (9th Cir. 2003) (“Because of the derivative nature
of subrogation, a subrogee insurer is subject to the same
statute of limitations that would have been applicable had the
insured brought suit in his or her own behalf.” (citation and
quotes omitted)).

Chubb contends that the statute of limitations under
section 338(b) is measured from the date that an insurer pays
an indemnity claim, alleged in this case to be December 4,
2008. In support of this proposition, Chubb relies on Smith
v. Parks Manor, 197 Cal. App. 3d 872 (1987) and Preferred
Risk Mutual Insurance Co. v. Reiswig, 21 Cal. 4th 208
(1999). But as the district court observed, these cases are
inapposite because they deal with third-party subrogation
actions, rather than, as here, payments made pursuant to
claims by its insured. In Parks Manor, the insurer intervened
in a negligence suit filed against its insureds, seeking
equitable indemnity against the cross-defendant for the
settlement amount it had paid to the plaintiff on the insured’s
behalf. 197 Cal. App. 3d at 876–77. The trial court granted
 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL 45

the cross-defendant’s demurrer without leave to amend
because it determined, in part, that the intervener’s action was
barred by the statute of limitations. Id. at 877. The appellate
court affirmed the dismissal under the applicable one-year
statute of limitations period for seeking equitable indemnities,
which it stated “accrues when the indemnitee suffers a loss
through payment of a judgment or settlement debt.” Id. at
882. In Preferred Risk, an insurer paid a $1 million policy
limit as settlement to a third party who filed suit against the
insured entity for injuries she sustained after her hand was
slammed in the insured’s van door. 21 Cal. 4th at 212. The
injured third party later filed a medical malpractice suit
against her treating doctors for subsequent complications to
her condition. Id. The insurer also filed a complaint in
subrogation against the doctors for equitable indemnity. Id.
The trial court dismissed the complaint under the one-year
personal injury statute of limitations, and the court of appeal
affirmed. Id. at 213. The issue before the California
Supreme Court was whether the tolling provision under Cal.
Code Civ. Proc. § 364 applied to the insurer’s equitable
indemnity action. In holding that the tolling provision
applied, the court relied, in part, on the rule that “[a] person
whose negligence causes injury that a physician’s malpractice
aggravates may seek equitable indemnity from the
physician,” and “[t]he equitable indemnity cause of action
does not accrue until the person pays the injured third party’s
claim.” Id. at 213.

In contrast to both these cases, Chubb does not assert a
claim for equitable indemnity arising from a payment it made
46 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL

to a third party on Taube-Koret’s behalf.14 Rather, Chubb’s
state law claims are premised on subrogated claims for the
recovery of payment made directly to Taube-Koret. Thus, the
rule articulated in Parks Manor and Preferred Risk is
inapplicable here and does not support Chubb’s position that
the limitations period under section 338(b) began at the time
it indemnified Taube-Koret. The district court correctly
determined that the statute of limitations period under section
338 accrues “when the plaintiff knows, or should have
known, of the wrongful conduct at issue.” Angeles Chem.
Co., 44 Cal. App. 4th at 119.

Nevertheless, Chubb insists that its suit is a third-party
subrogation action, and that it issued Taube-Koret a third-
party liability policy, rather than a first-party loss policy.
While Chubb is correct that the Policy includes third-party
liability coverage, it also provides for first-party loss, which
is the provision at issue in this case. (See Policy, Sect. 1.1
(“We will also pay remediation costs resulting from
discovery of a pollution incident . . . on or under the insured
site. . . .”).) As alleged in the TAC, Chubb reimbursed
Taube-Koret for expenses it incurred in cleaning up the
contaminated soil on its property, not a settlement to a third-
party for Chubb’s tortious conduct. Nor did the Water Board
issue a “claim” for loss caused by Taube-Koret, but rather,
issued a cleanup order to Taube-Koret. Thus, the district
court correctly determined that the limitations period began
to run at the time Taube-Koret knew or should have known of

14
Chubb originally brought a claim for equitable indemnity, which the
district court dismissed with leave to amend. Because Chubb did not
voluntarily renew these claims, however, it effectively abandoned them.
See Lacey, 693 F.3d at 928 (“[F]or any claims voluntarily dismissed, we
will consider those claims to be waived if not repled.”).
 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL 47

the pollution on its property, not when Chubb reimbursed
Taube-Koret for its response costs.

2. San Antonio Road Properties

Dismissal of Chubb’s state law claims on the ground that
it is barred by section 338(b) is proper only when “the
running of the statute is apparent on the face of the
complaint.” Huynh v. Chase Manhattan Bank, 465 F.3d 992,
997 (9th Cir. 2006) (citation and quotes omitted). Based on
the allegations in the TAC, the district court properly
determined that Chubb’s state law claims were time-barred.

Chubb alleges in the TAC that, on August 12, 2003, the
Water Board issued Order No. R2-2003-0071, naming Taube-
Koret as a discharger of hazardous substances found on 901
San Antonio Road, and that Taube-Koret removed
contaminated soil from that site in June and July 2006.
Construing these facts in the light most favorable to Chubb,
it is reasonable to infer that Taube-Koret knew or should have
known of hazardous substances on its property as early as
August 2003 and as late as July 2006, when it removed the
contaminated soil. There are no allegations that any other
environmental response actions occurred. Since Chubb did
not file suit until September 23, 2009, more than three years
after the removal date, its state law claims are time-barred as
to 901 San Antonio Road.

With respect to 851 San Antonio Road, Chubb alleges
that it acquired the property in November 2006 for inclusion
in its redevelopment project. While it may be inferred from
this purchase date that Chubb did not know about the
contamination until November 2006 (thus within the
limitations period), the Policy suggests otherwise. Under the
48 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL

Policy, which was incorporated in the TAC and all prior
complaints, there is an endorsement, dated December 28,
2004, which expressly identifies a “pollution incident” at the
851 San Antonio Road property that was excluded from
coverage. The description of the pollution incident references
underground storage tanks and product lines at the property,
as stated in an environmental site assessment dated
September 13, 2004. It is reasonable to infer that Taube-
Koret knew or should have known of at least some of the
contamination on 851 San Antonio Road in late 2004. Thus,
Chubb’s claims as to this property are also time-barred.

Chubb, however, argues that dismissal was improper
because the running date of the statute of limitations period
depends on whether the injury was permanent or continuous,
which the district court failed to evaluate. Chubb insists that
the TAC included allegations of “continuous physical injury”
that was finally remediated in 2008, and under California law,
the statute of limitations on continuous physical injury does
not begin to run until abatement of the injury. Chubb is
mistaken. California does not recognize a claim for
continuing negligence per se or continuing strict liability. See
Mangini v. Aerojet-Gen. Corp., 230 Cal. App. 3d 1125, 1149
(1991) (permitting amendment of complaint to allege
continuing trespass and nuisance, but finding claims for
negligence per se and strict liability time-barred), superseded
by statute on other grounds as stated in Makreas v. First Nat.
Bank of N. Cal., 856 F. Supp. 2d 1097, 1102 n.3 (N.D. Cal.
2012).15 Thus, allegations of continuing injury is immaterial

15
Ford acknowledges that for certain common law torts, such as
nuisance and trespass, the running time of the limitations period depends
on whether the conditions giving rise to the injury are permanent or
continuous. See M cCoy v. Gustafson, 180 Cal. App. 4th 56, 63, 84
 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL 49

to Chubb’s asserted claims, and later discovery of hazardous
substances does not extend the limitations period. Nor does
the change of ownership prolong the statute of limitations
because the injury is assessed vis-à-vis the property, not the
property owner. Beck Dev. Co. v. S. Pac. Transp. Co.,
44 Cal. App. 4th 1160, 1216 (1996) (“[T]he statute of
limitations does not commence to run anew every time the
ownership of the property changes hands.”). Finally, Chubb
does not rely on California’s Discovery Rule to toll the statute
of limitations, as it did not plead the requisite facts showing
“(1) the time and manner of discovery and (2) the inability to
have made earlier discovery despite reasonable diligence.”
CAMSI IV, 230 Cal. App. 3d at 1536. The district court
properly dismissed Chubb’s state law claims as time-barred.16

CONCLUSION

Our decision here does not mean that insurers cannot
bring subrogation claims in environmental matters. On the
contrary, insurers’ subrogation rights remain intact under
CERCLA section 112(c) and relevant state law provisions.
The right to subrogation under CERLCA section 112(c),
however, is not an unbridled right. It may be circumscribed

(2009). W hile Chubb asserted claims for nuisance and trespass in its First
Amended Complaint, they were dismissed by the district court with leave
to amend. Chubb did not renew those claims in the TAC, thereby waiving
them. See Lacey, 693 F.3d at 928.

16
Because we conclude that Chubb’s state law claims were properly
dismissed, we decline to reach the remaining issues raised by Chubb, of
whether it sufficiently alleged that Ford Motor is an “owner” or “operator”
of the Ford Aerospace “facility” under section 107(a), and whether it
pleaded sufficient allegations that Chevron or Stevenson is responsible for
a “release” of a hazardous substance.
50 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL

by Congress through certain requirements, including the
assertion of a claim by the subrogor-insured. Moreover, the
common law principle of subrogation does not apply to
section 107(a) because there is clear congressional intent to
the contrary, as evinced by the language of section 107(a), its
statutory scheme in relation to section 112(c), and
CERCLA’s overall purpose. Although CERCLA should be
liberally construed to effectuate the purpose of the statute, it
may not be extended so far as to fashion a new right under
CERCLA that Congress did not intend. Nor, a fortiori,
should a right be created by application of a common law
principle that not only contravenes the express language and
scheme of CERCLA, but also does not further its aims.
CERCLA was not enacted to benefit insurance companies;
rather, it was enacted to promote the timely cleanup of
contaminated waste sites, impose liability on those
responsible for polluting the environment, and to encourage
settlement through a complex statutory scheme. An
expansive application of subrogation to sections 107(a) and
112(c) is inconsonant with those overall goals. If Congress
wishes to change CERCLA’s statutory scheme, it may
certainly do so. But it is not the province of the courts to
rewrite the statute. CERCLA sets limits and provides express
guidance by which a party must abide. The statute of
limitations under state law also required Chubb to file suit in
a timely manner if it desired relief under state law. Chubb
failed to do so here. We thus affirm the district court.

AFFIRMED.
 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL 51

GOULD, Circuit Judge, dissenting:

I respectfully dissent. The majority provides a reasoned
explication of why statutory subrogation under section
112(c), 42 U.S.C. § 9612(c), does not apply. But the
majority’s analysis of section 107(a), 42 U.S.C. § 9607(a),
does not honor Chubb’s right to equitable subrogation, which
allows Chubb to stand in the shoes of Taube-Koret.

“Equitable subrogation is a broad equitable remedy,”
Mort v. United States, 86 F.3d 890, 894 (9th Cir. 1996), that
for centuries has been recognized by courts. See generally
M.L. Marasinghe, An Historical Introduction to the Doctrine
of Subrogation: The Early History of the Doctrine II, 10 Val.
U. L. Rev. 275 (1976). It “arose as a ‘creature of equity’ and
‘is enforced solely for the purpose of accomplishing the ends
of substantial justice.’” Hamada v. Far E. Nat’l Bank (In re
Hamada), 291 F.3d 645, 649 (9th Cir. 2002) (quoting
Memphis & L.R.R. Co. v. Dow, 120 U.S. 287, 302 (1887)). A
good explanation of the equitable right of subrogation can be
found in Dobbs’s treatise on the Law of Remedies:

Subrogation simply means substitution of one
person for another; that is, one person is
allowed to stand in the shoes of another and
assert that person’s rights against the
defendant. Factually, the case arises because,
for some justifiable reason, the subrogation
plaintiff has paid a debt owed by the
defendant. Having paid the defendant’s
creditor, the plaintiff stands in the creditor’s
shoes, becomes the real party in interest, and
is entitled to exercise all the remedies which
the creditor possessed against the defendant.
52 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL

1 Dan B. Dobbs, Law of Remedies: Damages-Equity-
Restitution § 4.3(4), at 604 (West Publishing 2d ed. 1993)
(quotations and footnotes omitted). Applying this “well-
settled rule” of equitable subrogation, I would hold that we
should recognize the right of an insurer to equitable
subrogation once it has reimbursed a landowner for
remediation expenses that in fairness should have been borne
in part by others. See United States v. Bestfoods, 524 U.S. 51,
63 (1998) (applying a “well-settled rule” of corporate
common law in the CERCLA context); see also Atchison,
Topeka & Santa Fe Ry. Co. v. Brown & Bryant, Inc.,
159 F.3d 358, 362–63 (9th Cir. 1998) (applying “traditional
rules” of successor liability under CERCLA).

Taube-Koret paid cleanup expenses that should have been
borne in part by Ford, Chevron, Sun Microsystems, Inc., and
others who polluted and contaminated the property. The
majority reasons that because Chubb reimbursed Taube-
Koret’s cleanup expenses and did not directly incur those
costs, it does not meet the definition of “any person” under
section 107(a). 42 U.S.C. § 9607(a). But the regime of law
mandated by the majority is contrary to CERCLA’s intent to
make polluters pay. See Burlington N. & Santa Fe Ry. Co. v.
United States, 556 U.S. 599, 602 (2009) (stating that
CERCLA was “designed . . . to ensure that the cost of such
cleanup efforts were borne by those responsible for
contamination”). Here, Chubb is left with the bill while the
polluters pay nothing.

It should not matter that the statutory subrogation remedy
elements are not satisfied under section 112(c). There is no
showing that Congress intended this type of subrogation to be
exclusive—no showing that Congress intended to eliminate
consideration of equitable subrogation. See Bestfoods,
 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL 53

524 U.S. at 63 (explaining that a federal statute does not
“abrogate a common-law principle” unless it “speak[s]
directly to the question addressed by the common law”
(quoting United States v. Texas, 507 U.S. 529, 534 (1993)).
Indeed, if Congress spoke to the issue at all it was to maintain
this common law right. See 42 U.S.C. § 9607(e)(2) (stating
that “[n]othing in this subchapter . . . shall bar a cause of
action that an owner or operator or any other person subject
to liability under this section, or a guarantor, has or would
have, by reason of subrogation”). At most the statute is
ambiguous, and it is within the power of our court to give it
a sensible construction in light of CERCLA’s purpose.1

The district court and the majority give credence to the
argument that permitting a subrogation claim under section
107(a) renders section 112(c) a nullity, but I disagree. In
United States v. Atlantic Research Corporation, the Supreme
Court recognized that CERCLA allows for complementary
remedies that provide causes of action “to persons in different
procedural circumstances.” 551 U.S. 128, 139 (2007).
Sections 112(c) and 107(a) provide for such complementary
remedies. Allowing a subrogation claim under section 107(a)
gives Chubb a remedy where one is otherwise not permitted

1
It is true, as the majority notes, that Bestfoods and Atchison adopted
well-settled common law in areas where CERCLA was silent on the issue.
See Bestfoods, 524 U.S. at 62–63, Atchison, 159 F.3d at 363. And it is
true that CERCLA’s silence is dispositive on Congress’s intent to adopt
well-established common-law principles. See Bestfoods, 524 U.S. at 70.
But it does not plainly follow, especially in light of the statute’s
ambiguous language, that CERCLA’s discussion of subrogation under
section 112(c) is evidence of a contrary intent sufficient to overcome the
“lenient presumption” that Congress “legislate[s] against a background of
common-law . . . principles.” Astoria Fed. Sav. & Loan Ass’n v. Solimino,
501 U.S. 104, 108, 112 (1991).
54 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL

under section 112(c) and where subrogation serves the
purposes of CERCLA. If Taube-Koret had made explicit
claims against Ford, Chevron, and Sun Microsystems, Inc.,
and Chubb had then reimbursed a “claimant,” there would be
no question that Chubb would be entitled to proceed under
section 112(c). But where an insurance company reimburses
an insured party that incurred cleanup costs but has not
asserted claims against potentially responsible parties, in my
view, the proper remedy is under section 107(a). To deny
this is detrimental to CERCLA. It is the actions of the
insured, and not the insurer, that determine the procedural
circumstances of the subrogation claim and dictate the proper
statutory remedy. See Atl. Research, 551 U.S. at 139. That
there is some overlap between these two remedies is not fatal.
See id. at 139 n.6. In either event, there should be a
subrogation remedy available to an insurance company that
has paid for a cleanup by reimbursing its insured.

The scheme of law adopted by the majority may be able
to decide this particular case by characterizing the actions of
the insurer’s legal counsel as too little and too late. This view
is inaccurate and reflects the majority’s failure to implement
a fair procedure of subrogation in a way that is called for
under section 107(a). Also, in the long run, one cannot
expect insurers to indemnify companies for pollution cleanup
costs without charging an insurance premium reflecting the
risk of monetary loss and that risk will necessarily increase if
the insurer cannot seek contribution from prior polluters and
property owners. Either insurance premiums for an
organization like Taube-Koret will go up dramatically, raising
questions on feasibility of insurance, or the policies will
condition payment on a prior claim by the insured against
other contributors to the pollution. This will discourage or
delay cleanups, putting public health and safety at risk and
 CHUBB CUSTOM INS. V . SPACE SYSTEMS/LORAL 55

undermining the purpose of CERCLA. See Burlington N. &
Santa Fe Ry. Co., 556 U.S. at 602 (explaining that CERCLA
was “designed to promote timely cleanup of hazardous waste
sites” (quotations omitted)). So the majority’s ruling here
will have the unfortunate and predictable impact of impeding
cleanup efforts that benefit the public.2

2
Congress can rectify this result for future cases by modifying their
statutory language in a way that would satisfy the majority. But for
practical reasons, we cannot assume that corrective legislative action will
promptly arrive. As Sir Frederick Pollock explained long ago, though in
a different context, “legislative methods and procedure being what they
are and must be, it is for the most part idle to count on legislation for this
[corrective] purpose.” Sir Frederick Pollock, A First Book of
Jurisprudence: For Students of the Common Law 310 (Burt Franklin
1970). If the statutory language really commanded the position taken by
the majority, I would of course abide it. But in my view, the ambiguous
statutory language permits a more sensible result than that taken by the
majority.