ELR Citation: ELR 20439
No(s). 86-2093 (W.D. Pa. Sep 1, 1989)

The court holds that a bank that held a mortgage on contaminated property is not liable under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) before it foreclosed on the property, but may be liable for CERCLA cleanup costs arising after it purchased the property at the foreclosure sale. The court first holds that the bank was not an "owner or operator" under CERCLA §107(a) before it foreclosed on the property. A mortgagee is exempt from CERCLA liability under §101(20)(A) so long as it did not participate in the managerial and operational aspects of the facility. The bank's actions here were merely intended to protect its security interest. However, the court holds that the bank may be liable under CERCLA during the time that it was the record owner of the property. The court rules that the security interest exemption in §101(20)(A) does not apply when a secured creditor purchases its security interest at a foreclosure sale. When a lender is the successful purchaser at a foreclosure sale, it should be liable to the same extent as any other bidder.

Counsel for Plaintiff
Bradley Tupi
Reed, Smith, Shaw & McClay
James H. Reed Bldg., Mellon Sq., 435 Sixth Ave., P.O. Box 2009, Pittsburgh PA 15219-1886
(412) 288-3131

Counsel for Defendant
Philip Katauskas
Baskin, Flaherty, Elliott & Mannino
Three Mellon Bank Center, 18th Fl., Philadelphia PA 19102
(215) 977-7400