ELR Citation: ELR 21570
No(s). 2:93-CV-116-RL (N.D. Ind. Jun 5, 1995)

The court holds that a deceased potentially responsible party's (PRP's) estate may be held liable under a trust fund theory when the decedent died during the pendency of a government cost recovery action under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA). The court first holds that there are no genuine issues of material fact as to whether the deceased fits within the elements of CERCLA liability. The site is within CERCLA §101(9)'s definition of a "facility" because it is a location that was used for the disposal of liquid and solid chemical waste, and the waste at the site includes CERCLA hazardous substances. Also it is undisputed that the operations at the site amounted to a "release" of hazardous substances under §101(22) and that the government incurred response costs. The deceased fits within the category of liable persons because he operated the site during the relevant time that hazardous substances were transported to, and dumped at, the site. Because the decedent died during the pendency of the CERCLA action, the court employs a trust fund theory to hold the estate liable under CERCLA to the extent the deceased was liable under CERCLA. Under the trust fund theory, the estate is deemed to hold the assets received from the liable party's estate in trust for the benefit of satisfying the environmental liabilities of the deceased PRP. The estate is liable only to the extent of the decedent's remaining assets, to which it would not have had access if the deceased had lived and was required to reimburse the government's response costs.

The court next interprets a covenant not to sue in a partial consent judgment between the United States and the decedent to resolve a Resource Conservation and Recovery Act suit regarding the same site to mean that the government could bring another action against the deceased only if he did not comply with the judgment, new contamination was discovered, or contamination was discovered that was unknown to the government at the time it entered into the agreement. The court holds that a genuine issue of material fact exists as to whether the deceased materially breached the agreement and, thus, whether or not the agreement has preclusive effect in this action. Accordingly, the court holds that the estate's preclusion defense is not void at this time. The court then holds that equitable defenses are insufficient and unavailable as defenses to a CERCLA §107 liability claim. Finally, the court strikes the estate's attempt to reserve a right to bring other affirmative defenses, because Fed. R. Civ. P. 8(c) requires a defendant to assert all affirmative defenses in its answer.

[A previous decision in this litigation is published at 24 ELR 21057.]

Counsel for Plaintiff
Thaddeus Lightfoot, Myles E. Flint
Environment and Natural Resources Division
U.S. Department of Justice, Washington DC 20530
(202) 514-2000

Counsel for Defendants
Ann C. Tighe, James R. Streicker
Cotsirilos, Stephenson, Tighe & Streicker
33 N. Dearborn St., Chicago IL 60602
(312) 263-0345