Facts

In 2014, SOMA Environmental Engineering, Inc., was hired by Dinuba Unified School District to evaluate and, if necessary, remediate soil and groundwater beneath a parcel of the district's property that was previously utilized as a gas station. Ultimately, the school district planned to use the property as high school tennis courts. Under the agreement, SOMA was to create and implement a cleanup plan for the property and install 27 groundwater monitoring and remediation wells. The cleanup and remediation was completed in 2016, and the scope of the project was redirected to convert the property to its intended use. A necessary step in this process was the decommissioning and abandonment of the 27 groundwater monitoring wells. In 2017, SOMA hired Choice Drilling, Inc. to conduct the decommissioning and abandonment. The contracting process between the parties was conducted relatively informally via email, with the parties agreeing on a price for the work and that the wells would be destroyed by pressure grouting. Work on the wells was completed by November 14, 2017, and, in January 2018, SOMA prepared a Well Completion Report for each of the 27 wells and submitted them to Choice for signature. The reports were signed by a representative of Choice, and they were submitted as required for payment. Then, in May 2018, SOMA received a letter from State Water Resource Control Board (SWRCB), which had funded the district's project, delineating deficiencies in SOMA's work on various State projects and alerting SOMA of its intention to pursue over $18 million in penalties for alleged negligent and fraudulent misrepresentations. Included among these was evidence that the wells decommissioned by Choice had not been pressure grouted as claimed in the submitted reports. According to the SWRCB, this misrepresentation subjected SOMA to a penalty under its claim. Ultimately, SOMA agreed to pay to settle the SWRCB's claims. Then, SOMA filed suit for various causes of action against Choice, and it sought damages in the amount of $1,326,810, plus attorney's fees and costs. The damages represented amounts for the settlement money paid to SWRCB, receivables SOMA forfeited in its SWRCB settlement, lost profits, fees paid to a prior attorney, and future economic damages.

PLAINTIFF'S CONTENTIONS: Plaintiff contended that defendant failed to pressure grout the wells as agreed; that defendant provided false information that was in turn submitted to SWRCB; that the work deficiencies and false reports were the sole basis for the dispute and settlement with the SWRCB; that these acts were a breach of the agreement with defendant to decommission and abandon the wells; and that defendant was responsible for all of the consequential damages plaintiff had suffered. Plaintiff contended that State Water Code §13750.5 places the responsibility for ensuring that the work is not deficient on Choice because it is a Specialty Licensed Contractor.

DEFENDANT'S CONTENTIONS: Defendant denied all of plaintiff's material allegations. More specifically, defendant contended that the wells were decommissioned in compliance with the parties' agreement; that plaintiff supervised the project and approved all work changes; and that Plaintiff's settlement with SWRCB was unrelated to or insignificantly based on work completed by Defendant.

Result

After a Zoom trial, the court concluded that SOMA failed to carry its burden of proof to demonstrate that the work completed by Choice was a substantial factor in causing SOMA's harm. Instead, the court concluded that SOMA had been under investigation by SWRCB for many years, and that the disciplinary action would have occurred notwithstanding Choice's work. The court further concluded that all work was completed by Choice in compliance with the parties' agreement, and since SOMA could not demonstrate its harm resulted from Choice's conduct, SOMA's other causes of action must also fail.