ELR Citation: ELR 20123
No(s). 91-12280-T (D. Mass. Jun 28, 1993)

The court denies motions for summary judgment on liability under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) of the son, grandchildren, and executors of the wills of past owners of the contaminated site of a Massachusetts manufacturing facility. The court first denies the executors' motion to dismiss for failure to state a claim, because the complaint states factual averments to support a claim against them, although their names appear only in headings and captions. The complaint alleges that the estates are liable under CERCLA and that the distribution of the estate assets left the estates without sufficient assets to meet their environmental liabilities or to pay their creditors, including plaintiffs. The executors have, therefore, been made aware of the claims asserted against them. Furthermore, the executors have responded to each allegation in the first amended complaint and have replied with various affirmative defenses, counterclaims, and cross-claims. The court next holds that the plaintiffs' claims against the executors are not time barred under the Rhode Island Probate Code. CERCLA preempts the Probate Code's statute of limitations due to CERCLA's broad remedial purpose and Congress' expressed intent that those responsible for hazardous waste sites bear the cost of cleaning them up. The court holds that it has personal jurisdiction over the executors, because the testators were both former owners and operators of the site and of the company that operated the manufacturing facility. These contacts would have been sufficient to permit a Massachusetts court to exercise jurisdiction over them while they were still living.

The court next dismisses a motion for summary judgment on the liability of one of the testators' sons, who was a major stockholder of a corporation that owned the site, and was the secretary and a stockholder of the corporation that owned the company that operated the manufacturing facility. Material facts remain in dispute as to whether the companies were so closely interrelated as to preclude the son from relying on the corporate form to evade liability. The court holds that an indemnity clause in the lease agreement between the corporate site owner and the facility operator was insufficient to allocate CERCLA liability to the facility operator, because the lease contains no language that refers to environmental-related liability, and no evidence exists that the parties discussed contamination of the land or that extra consideration was paid for the release of any future environmental liabilities. The court further holds that under applicable case law an estate's beneficiary may be deemed to hold the estate's assets in trust to meet the estate's environmental liabilities. The court also holds that claims against the testators' son in his capacity as an estate beneficiary are not time barred by the Rhode Island Probate Code.

The court next holds that a foundation named as beneficiary of the testators' estates may be deemed to hold the estates' assets in trust to meet the estates' environmental liabilities, and that plaintiffs' claims against the foundation are not time barred by the Rhode Island Probate Code. The court holds, however, that it lacks personal jurisdiction over the foundation. CERCLA's provision for nationwide service of process is only applicable to suits brought on behalf of the United States, not on behalf of private litigants. The fact that a trustee of the foundation is already before the court does not confer jurisdiction, because plaintiffs have not argued that the court has personal jurisdiction over the trustee in his capacity as trustee. Also, Massachusetts' long-arm statute does not provide that the distant origin of a trust's assets be considered a contact with the state for jurisdictional purposes. Further, the foundation lacks the minimum contacts with Massachusetts necessary to confer jurisdiction, because the suit does not arise from the foundation's practice of making donations in Massachusetts, and the foundation's donation practice does not constitute continuous and systematic activity in Massachusetts.

The court holds that the testators' grandchildren may be deemed to hold estate assets in trust for plaintiffs, and plaintiffs' claims are not time barred by the Rhode Island Probate Code. The court holds that the grandchildren are not entitled to rely on CERCLA's innocent landowner defense, because they received their interest in the property before the release of hazardous substances by means of an instrument transferring title or possession, which constitutes a contractual relationship. The court holds that it has jurisdiction over the grandchildren by virtue of the fact that they owned an interest in the contaminated site, they each received assets from profits of the operations of the facility operator, and two of them were directors of the facility operator's corporate owner, which had its principal place of business in Massachusetts. Finally, the court holds that the current site owner, a plaintiff in this action, is not required to indemnify defendants under its bylaws, because the bylaws exclude coverage for actions brought by or in the right of the corporation.

Counsel for Plaintiffs
Martha B. Sosman, Eileen M. Hagerty
Kern, Sosman, Hagerty, Roach & Carpenter
24 School St., 6th Fl., Boston MA 02108
(617) 720-1800

John J. Lormon, Robert W. Ayling
Gray, Cary, Ames & Frye
401 "B" St., Ste. 1700, San Diego CA 92101
(619) 699-2700

Counsel for Defendants
RichardJ. Medalie
Medalie & Ferry
1901 Pennsylvania Ave. NW, Ste. 301, Washington DC 20006
(202) 659-0880

Nancy L. Brush, Albert F. Cullen Jr.
Cullen & Butters
One Beacon St., 13th Fl., Boston MA 02108
(617) 367-2600