ELR Citation: ELR 20428
No(s). 88-1324-K (D. Mass. Nov 24, 1992)

In a bench ruling, the court holds that a bank is not liable for cleanup costs under the Comprehensive Environmental Response, Compensation, and Liability Act at a Massachusetts Superfund site. The court holds that the bank, which granted loans to the site owner secured by mortgages and 90 percent guaranteed by the Small Business Administration, used its indicia of ownership of the site only to protect its security interest. The court rejects contrary testimony by the borrower's owner and an individual allegedly authorized by the bank to operate the site, finding their testimony incredible, inconsistent with documentary evidence, self-contradictory, and impeached by the witnesses' deceptive acts and practices. The court rejects the argument that the bank attempted to continue the borrower's operations to "bleed" it of its assets, because this would reduce the likelihood that the bank would recover its unguaranteed loans and involved additional lending. The court also finds that the bank attempted to collect on accounts receivable that secured the borrower's loans solely to protect the bank's security interest, and this did not constitute control of the borrower or the site.

Counsel for Plaintiffs
Louis N. Massery, Roy P. Giarrusso
Cooley, Manion, Moore & Jones
21 Custom House St., Boston MA 02110
(617) 737-3100

Counsel for Defendants
Edward J. Barshak, Paul E. White
Sugarman, Rogers, Barshak & Cohen
33 Union St., Boston MA 02108
(617) 227-3030

Francis K. Monarski
550 Merrimack St., Lowell MA 01854
(508) 458-4528