ELR Citation: ELR 20755
No(s). C-93 20928 RPA/PVT (N.D. Cal. Nov 14, 1994)

The court holds that a bank whose predecessor acted as conservator and executor of the estate of a former owner of a site contaminated with toxic chemicals from cattle dipping may be held liable as an owner or operator under §107 of the Comprehensive Environmental Respnose, Compensation, and Liability Act (CERCLA). The court first finds that a triable question of material fact remains as to the issue of whether the bank's predecessor owned or operated the site during the period of hazardous substance disposal, because there is a dispute as to when the cattle dipping took place and when it ended. The court next holds that a stricter test for CERCLA owner liability should apply to conservators and executors than to trustees, because their title is much less than the title held by trustees. The court finds that bare legal title is not enough to determine whether a fiduciary should be held liable as an owner under CERCLA; conservators and executors must not only hold bare legal title, but must possess other indicia of ownership. The court holds that questions of material fact clearly remain as to the issue of whether the bank's predecessor possessed sufficient indicia of ownership of the estate for purposes of CERCLA liability. As a lessor, the bank stood in the shoes of the property owners, and therefore had control over and responsibility for the use of the property, including any cattle dipping that may have caused further contamination. Evidence also indicates that the bank's predecessor requested and was granted additional powers under the California Probate Code that allowed it to sell and convey property without court order, which is one of the most basic elements of title and is an important indicator of ownership. The court next holds that the current site owner has offered adequate evidence to raise issues of material fact as to the bank's liability as an operator. The court holds that evidence indicates that the bank's predecessor may have had authority to control the property while it was conservator and executor, and did in fact exercise that authority. The predecessor had greater than noraml powers as a conservator, which indicates that it was or wanted to be involved in the management and operation of thefacilities in this case. Other evidence suggests that the predecessor was involved in the sale of the property, the appraisal of the property for purposes of establishing a sales price, the discussion of terms, and the preparation of the sales contract. Further, the predecessor's trust administrator admitted that he had a fiduciary duty to manage and protect the property and that his duties included periodically inspecting the property, ensuring that it did not become run down, ensuring that its value did not diminish, ensuring that it was taken care of, and making sure that it carried liability insurance.

The court next holds that the questions regarding the predecessor's authority to control operations on the property while it was conservator and executor preclude the court from determining whether the bank's liability should be limited to the extent of the former owner's estate or whether the current owner may reach the bank's corporate assets. The court next holds that the current owner's state law claims for nuisance, trespass, and negligence will succeed or fail on the factfinder's ultimate decision on the predecessor's ownership of and ability to control the property. The court finally holds that there is a triable issue of fact on whether the current owner brought these claims within the statute of limitations and whether the predecessor was on notice or should have realized that a toxic spill had occurred on the property.

Counsel for Plaintiff
Robert D. Wyatt, Danielle J. O'Hanlon
Beveridge & Diamond
One Sansome St., Ste. 3400, San Francisco CA 94104
(415) 397-0100

Counsel for Defendants
Thomas Packer
Gordon & Rees
Embarcadero Ctr. W.
275 Battery St., 20th Fl., San Francisco CA 94111
(415) 986-5900