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QUADION CORP. v. MACHE

May 17, 1990

QUADION CORPORATION, a Minnesota corporation, Plaintiff,
v.
DELORES H. MACHE, THE JOHN MACHE DECLARATION OF TRUST, Dated August 1, 1973; JOHN DOE and MARY ROE as Beneficiaries of The John Mache Declaration of Trust, THE FIRST NATIONAL BANK OF DES PLAINES, as Trustee of The John Mache Declaration of Trust, NBD PARK RIDGE BANK as Trustee of THE John Mache Declaration of Trust, and NBD TRUST COMPANY OF ILLINOIS, as Trustee of The John Mache Declaration of Trust, Defendants


James F. Holderman, United States District Judge.


The opinion of the court was delivered by: HOLDERMAN

JAMES F. HOLDERMAN, UNITED STATES DISTRICT JUDGE.

 After discovering that property which its subsidiary had purchased from Delores Mache and The John Mache Declaration of Trust was severely contaminated with deposits of polychlorinated biphenyl ("PCB"), Quadion Corporation ("Quadion") filed its complaint in this case. The First Amended Complaint (hereinafter "Complaint") alleges a violation of the Comprehensive Environmental Response, Compensation and Liability Act of 1980 ("CERCLA," the "Act," or "Superfund"), 42 U.S.C. § 9601 et seq. (Count I); the tort of nondisclosure of a latent defect (Count II); negligence (Count III); strict liability in tort (Count IV); breach of warranty or contract (Count V); breach of an indemnity agreement (Count VI); and a claim for certain equitable relief (Count VII). Ms. Mache, NBD Park Ridge Bank and NBD Trust Company filed a motion pursuant to Fed. R. Civ. P. 12(b)(6) to dismiss all counts of the complaint, which was subsequently joined by The John Mache Declaration of Trust. For the reasons set forth herein, defendants' motion will be granted in part and denied in part.

 BACKGROUND FACTS

 For purposes of this motion to dismiss, the court must accept all of the factual allegations of the complaint as true and construe those allegations in the light most favorable to the plaintiffs. So interpreted, the complaint portrays the following scenario of events:

 On or about July 6, 1978 Quadion's predecessor-in-interest *fn1" purchased all of the shares of Delta Die Casting from Ms. Mache and the Mache Trust. (Complaint, para. 9.) After acquiring the company, Quadion learned that the real property on which the die casting facility was located, including the soils, sub-soils and the building, "were severely contaminated with deposits of [polychlorinated biphenyl or 'PCB'] . . . ." (Complaint, para. 15.) Plaintiff's pleading alleges that while they were in possession of the die casting facility (the "facility"), defendants

 
deposited and disposed of PCBs, and permitted said PCBs to accumulate and collect on and in the soil and sub-soil of the Property, and building, structures and improvements thereon or authorized, permitted or ratified said activities.

 (Complaint, para. 18.)

 By letter dated March 28, 1986 Quadion gave notice to the defendants of the PCB problem and offered the defendants the choice of either cleaning up the facility and surrounding property or reimbursing Quadion for the cost of so doing. Quadion notified defendants that since the sale of the property was imminent, if no response was forthcoming Quadion would go forward with the cleanup and seek reimbursement from the defendants. (Complaint, para. 19.)

 When in fact Quadion received no reply to its letter, it undertook the clean-up of the site. (Complaint, para. 20.) Between early April of 1986 and February 27, 1987 Quadion spent $ 214,125 on "response" activities. (Complaint, para. 23.) *fn2" Quadion sold the property to Metalmaster, Inc. on May 4, 1986. (Complaint, para. 22.)

 On or about April 15, 1987 Quadion was notified by counsel for Metalmasters (or Ganton, Inc., its successor-in-interest) that additional PCB contamination had been discovered on the property. Since this discovery Quadion has incurred additional response costs investigating and disposing of the PCB contamination. Ganton, too, has expended funds for PCB cleanup: Ganton has now demanded that Quadion clean up the remaining PCB contamination or be subject to litigation. (Complaint, paras. 27-31.)

 Quadion has demanded reimbursement from the defendants for its initial response expenditures, and has notified it of the additional contamination discovered by Metalmasters and Ganton. (Complaint, paras. 25, 28.) Quadion's demands for reimbursement from the defendants have been futile. (Complaint, para. 26.) Accordingly, Quadion filed its complaint in this case on April 28, 1989.

 DISCUSSION

 A. Count I: CERCLA

 The defendants have moved to dismiss Count I on the ground that it fails to allege any factual basis pursuant to which they could be found liable or potentially liable as owners or operators of a facility. More precisely, defendants argue: (1) that they do not fall within the owner category since they were merely shareholders of a corporation, and therefore not responsible for corporate Superfund liability; and (2) that the complaint fails to allege any facts whatsoever that would demonstrate that the defendants exercised the requisite degree of control over the facility such that they could be found to have been its operators. (See Defendants' Mem. in Support, pp. 3-6.) Cf. Edward Hines Lumber Co., supra, 861 F.2d at 156 (noting circularity of statutory definition of "owner or operator" under § 9601(20)(A)(ii) and holding that contractor who was neither independent contractor nor joint venturer could not be liable for contribution as an "operator" of a facility).

 Defendants' motion to dismiss Count I must be denied. The complaint adequately sets forth sufficient facts pursuant to which the court could find that Delta Die Casting was a closely held company in that "'one or a few persons hold substantially the entire ownership of it . . . .'" Aetna Casualty and Surety Co. v. Kerr-McGee Chemical Corp., 875 F.2d 1252, 1258 (7th Cir. 1989), quoting Restatement (2d) of Judgments, § 59 (1982). Defendants, too, have noted that until 1978 Delta Die Casting "was a family owned business purchased by John Mache." (Defendants' Mem. in Support, pp. 1-2.) Courts addressing the issue have determined that shareholders of a closely held corporation can, under certain circumstances, be held responsible for the corporation's Superfund liability even in the absence of facts which would warrant the piercing of the corporate veil. See Kelley v. Thomas Solvent Co., 727 F. Supp. 1532, 1542-1545 (W.D. Mich. 1989); see also United States v. Mirabile, 15 ELR 20992 (Sept. 4, 1985) (citing various cases in which it was held that individual shareholders who actively participated in the affairs of closely held corporations could be held responsible ...


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