Facts

In July 1970, plaintiff Robert C. Cook, Sr. and defendant Shell Oil Company entered into a lease agreement, regarding the use of Cook's Sacramento property. The agreement contained a provision prohibiting Shell from assigning any right of the property to another without Cook's written consent.

In 1998, Shell Oil formed a joint venture with defendant Equilon Enterprises for its retail operations in the United States and sought to assign all of its retail leases to Equilon.

That same year, the parties discovered the release of petroleum hydrocarbons (MTBE) in the Cook property soil that would require expensive clean-up and remediation. The involved property was on half an acre of land.

In 2005, the Air Quality Control Board ordered Shell Oil to begin excavation and remedial effort of the Cook property.

Plaintiff brought suit against Shell Oil, Equilon Enterprises, and defendant Equiva Services LLC (another joint venture partner) for breach of property lease agreement, breach of covenant of good faith and fair dealing, trespass, and negligent contamination of property.

PLAINTIFF'S CONTENTIONS:
Plaintiff contended that, without his written consent and in violation of the parties' lease agreement, Shell Oil assigned the Cook property lease to Equilon.

Plaintiff further contended that Shell Oil, Equilon, and Equiva negligently operated its business causing dangerous petroleum hydrocarbons to contaminate the property. Plaintiff contended that, due to the delayed efforts to remediate, the contamination from the leased property spread to the adjacent property, also owned by Cook, causing him appreciable loss in property value of both the leased and adjacent properties.

DEFENDANT'S CONTENTIONS:
Defendants claimed that Shell Oil gave plaintiff notice of the lease assignment and plaintiff "unreasonably withheld" consent of the lease assignment. The defense contended that, with assignment being made to Equilon, a financially stable entity formed with government approval, plaintiff suffered no harm from the lease assignment.

Defendants further contended that the contamination of the leased and adjacent properties did not result in any appreciable harm to plaintiff. Defendants contended that, for seven years, they worked to fully clean up the contamination.

The defense asserted that, in 2007, soil samples revealed that there was no longer any significant soil contamination on the properties. The defense further asserted that any subsurface trespass did not cause plaintiff any actual damage to the full and complete use and enjoyment of the property as rent for said property was always paid and accepted by Cook timely.

Damages

Plaintiff sought damages for loss of use, cost of repair and restoration of the property, diminution of value, costs resulting from the breach of the lease agreement and punitive damages for trespass.

Result

The parties settled for $2.9 million, after prolonged mediation sessions and discussions with Justice Edward A. Panelli, jury selection, and opening statements.