ash to the site. Hale Dep. at 28. Petersen, Inc. urges that Tewes is liable under Section 9607(a)(4), which provides that
any person who accepts or accepted any hazardous substances for transport to disposal or treatment facilities, incineration vessels or sites selected by such person, from which there is a release . . . of a hazardous substance, shall be liable [for response costs].
42 U.S.C. § 9607(a)(4) (emphasis added). Under the unambiguous terms of section 9607(a)(4) and well-settled case law, a person cannot be liable as a transporter unless that person actually selects the site. See, e.g., Alcatel Infor. Systems v. Arizona, 778 F. Supp. 1092, 1096 (D. Ariz. 1991); United States v. Western Processing Co., 756 F. Supp. 1416, 1420 (W.D. Wash. 1991); United States v. Hardage, 761 F. Supp. 1501, 1516-17 (W.D. Okla. 1990).
Here, it is undisputed that Tewes did not select the Petersen, Inc. site as the site to deliver the fly ash. Henry Tewes, Jr., a principal in Tewes, offers in his affidavit that "The Tewes Co., Inc. did not select the Petersen site as the location to deliver the fly ash." Tewes Aff., Ex. H to Tewes 12(m) P 8. Petersen, Inc. denies that Tewes did not make the site selection. See Petersen, Inc. 12(n) to Tewes P 43. However, Petersen, Inc.'s citation to deposition testimony is unavailing: the Hale deposition does not assert that Tewes selected the Petersen, Inc. site. Tewes has met its summary judgment burden, and Petersen, Inc. has not offered any evidence beyond the pleadings to establish a genuine issue of material fact. Cf. Becker, supra. Tewes' motion for summary judgment is granted.
E. The Forest Preserve's Motion
The Forest Preserve moves for summary judgment against Petersen, Inc. on the ground that the Forest Preserve is an "innocent owner" under CERCLA. To avail itself of this defense, the Forest preserve must show, among other things, that it had no direct or indirect contractual relationship with any third party who caused a release. 42 U.S.C. § 9607(b)(3). CERCLA excludes from the definition of "contractual relationship" the acquisition of property by condemnation only if the property "was acquired by the defendant after the disposal or placement of the hazardous substance on, in or at the facility." Id. § 9601(35)(A)(ii).
Petersen, Inc. argues that the Forest Preserve is not entitled to the innocent owner defense because the Forest Preserve legally "acquired" the site in 1974, before a disposal occurred. The Forest Preserve initiated proceedings to condemn the Petersen, Inc. site in 1974; a final judgment of condemnation awarded the site to the Forest Preserve in 1982. Exs. P & Y to Forest Preserve 12(m). Petersen, Inc. contends that the Forest Preserve acquired the site upon filing the condemnation petition in 1974, not upon final judgment in 1982. Pointing out that there were deliveries of fly ash to the site as late as 1977, see Tewes 12(m) Ex. I, Petersen, Inc. concludes that the Forest Preserve is not an "innocent owner" because disposal of fly ash occurred after the Forest Preserve "acquired" the site. The Forest Preserve counters that Petersen, Inc.'s argument relies principally on a "legal fiction" -- the Illinois eminent domain concept that title relates back to the date the condemnation petition was filed -- that has no place in CERCLA's liability scheme.
CERCLA does not further define "acquire." When a term is not defined in CERCLA, the Seventh Circuit consults the common law. See Edward Hines, 861 F.2d at 157. Given its context in the innocent owner defense, it seems clear that "acquire" here means "to gain ownership of." Cf. Black's Law Dictionary 23 (5th ed. 1979). Unfortunately, CERCLA also fails to define "ownership"; under Edward Hines, the question turns on whether Illinois law views a municipality as an "owner" once the municipality files a condemnation petition.
In Illinois, although title to condemned property does not vest until the condemnor pays just compensation, that title, as well as all rights and interests in the property, relates back to the date of the filing of the condemnation petition. Crystal Lake v. LaSalle Nat. Bank, 121 Ill. App. 3d 346, 459 N.E.2d 643, 646, 76 Ill. Dec. 728 (Ill. App. 1984). The Illinois Supreme Court explained the threads and justification for the doctrine as follows:
The time of filing a petition to condemn is wholly without the control of the owner who, immediately upon the filing of the petition, no longer has the freedom to deal with the property as an owner in fee simple. He has no assurance that the case will proceed to trial and judgment in the year in which the petition is filed or within several years thereafter; he has no assurance that, when an award by a jury is made and judgment entered thereon, the condemning agency will pay the award within a reasonable time. In other words, between the time of filing the petition and the time that the award is actually paid by the condemnor, the owner of real estate cannot enter into long term leases, make improvements, or even maintain the property with hope of reimbursement, and certainly cannot sell it excepting subject to the proceedings then pending.
The mere filing of a petition to condemn effectively encumbers the land, imposing a burden upon it, impeding its transfer, and to that extent destroying the fee-simple estate of the owner.
Public Bldg. Com. v. Continental Illinois Nat. Bank & Trust Co., 30 Ill. 2d 115, 195 N.E.2d 192, 196 (Ill. 1963). Thus, after a petition to condemn is filed in Illinois: A private owner is not responsible for property taxes immediately from the date a petition is filed, see id.; a private owner may only receive the value of the property at the time the petition is filed, see id.; and a competing municipality that files a later condemnation petition has inferior rights in the property, see Crystal Lake, 459 N.E.2d at 650.
On the other hand, a condemnor has no right whatsoever to possess or control the property until the payment of just compensation. Id. at 646. As discussed infra on Northern Trust's motion, control is the touchstone of ownership, both generally and for purposes of CERCLA. Even though a private owner may lose some indicia of ownership when a condemnation petition is filed, the condemnor may not exercise those indicia until it pays just compensation. A condemnor cannot prevent environmental damage in the interim, it is not responsible for the damage, and it does not benefit from the damage; there is simply no CERCLA justification for holding the condemnor liable for interim damage. Cf. Mardan Corp. v. C.G.C. Music, Ltd., 804 F.2d 1454, 1455 (9th Cir. 1986). Accordingly, a condemnor in Illinois may benefit from CERCLA's innocent owner defense so long as any disposal occurred before the condemnor pays just compensation and actually receives title.
Petersen, Inc. likens the Forest Preserve's liability to the liability of the holder of a security interest that later obtains title to a site through foreclosure. Some federal courts have held a lender liable in those circumstances, but those courts considered a completely different CERCLA provision involving the definition of "owner" -- a definition that specifically excludes holders of security interests unless the holder participates in the management of the site. See 42 U.S.C. § 9601(20)(A); Guidice v. BFG Electroplating and Manufacturing Co., 732 F. Supp. 556 (W.D. Pa. 1989); United States v. Maryland Bank & Trust Co., 632 F. Supp. 573 (D. Md. 1986). Because that provision is not the issue here, these cases shed little light on the current question of the more general definition of ownership.
Petersen, Inc. also contends that because the Forest Preserve could have withdrawn its petition at any time and the Forest Preserve knew or should have known the site was contaminated, the Forest Preserve cannot benefit from the innocent owner provision. CERCLA's provisions are, however, clearly to the contrary. CERCLA only requires an absence of knowledge if neither of the other two innocent-owner circumstances -- either, as is the case here, (1) the defendant is a government entity that acquired through involuntary transfer, or (2) the defendant acquired through inheritance -- is present. 42 U.S.C. § 9601(35)(A) (requiring "one or more of the" circumstances).
Petersen, Inc. has nonetheless established a genuine issue of material fact that prevents summary judgment in favor of the Forest Preserve. Petersen, Inc. submits an Illinois Environmental Protection Agency form indicating that an agent of the Forest Preserve reported that pesticide drums were disposed of on the site sometime in 1984 -- well after the Forest Preserve acquired the property through condemnation judgment. Resp. Ex. 6. The Forest Preserve's papers do not address this contention. As there is a genuine dispute over whether a disposal occurred in 1984, the motion for summary judgment must be denied.
F. Northern Trust Bank's Motion
Northern Trust Bank/Lake Forest N.A. ("Northern Trust")
moves for summary judgment against Petersen, Inc. on the ground that Northern Trust was not an "owner" under Section 9607(a)(2). In 1959, the land on which the Petersen, Inc. site is located was placed into an Illinois land trust, with Northern Trust as the trustee. Ex. A to Northern Trust 12(m). The trust was extended in 1979, see Ex. C to Northern Trust 12(m), and terminated in 1982. See Moss Aff., Ex. D to Northern Trust 12(m) P 7. Northern Trust therefore held legal title to the land making up the site during all the releases at issue. Petersen, Inc. contends that by virtue of holding legal title to the land, Northern Trust was an "owner" of the land -- and therefore a responsible person under Section 9607(a)(2). See 42 U.S.C. § 9607(a)(2) (making liable any person who at the time of disposal "owned" any facility). Northern Trust counters that an Illinois land trust is hardly more than a form of title registration; because trustees lack any control over the land whatsoever, there is absolutely no policy justification to hold a trustee liable under CERCLA. At issue is whether holding legal title to real property in Illinois as a trustee to a land trust is "owning" the property under CERCLA.
CERCLA does not define ownership. See Edward Hines, 861 F.2d at 156. When CERCLA leaves a term undefined, courts properly turn to the common law to fill the gap. Id. at 157.
An Illinois land trust is an odd legal creature. Although Illinois statutory law now recognizes the validity of a land trust, the land trust was created at common law by the bar. See Ill. Rev. Stat. ch. 148, P 71; People v. Chicago Title & Trust Co., 75 Ill. 2d 479, 389 N.E.2d 540, 27 Ill. Dec. 476 (Ill. 1979). The trustee holds both the legal and equitable title; the beneficiary has only a personal property interest. Id. However, all but one of the incidents to ownership of real property remain with the beneficiary: The trustee's sole duty under the trust is to hold and dispose of legal title at the written direction of the beneficiaries.Id.; Robinson v. Chicago National Bank, 32 Ill. App. 2d 55, 176 N.E.2d 659 (Ill. App. Ct. 1961). It is the beneficiary of an Illinois land trust -- and not the trustee -- who has full management and control of the property. Id. Perhaps as a result of the land trust, Illinois courts make the distinction between title and ownership: Title refers to a legal relationship to the land, while ownership is comparable to control and denotes an interest in the real estate other than that of holding title. Chicago Title, 389 N.E.2d at 544. Given this construct, it is the beneficiary who bears the burden of land ownership under Illinois laws, not the trustee. See, e.g., id. (beneficiaries were liable for property taxes because they "owned" realty); IMM Acceptance Corp. v. First Nat. Bank & Trust Co., 148 Ill. App. 3d 949, 499 N.E.2d 1012, 1015, 102 Ill. Dec. 232 (Ill. App. Ct. 1986) (for purposes of Statute of Frauds, "true ownership lies with the beneficiary though title lies with the trustee"); Story v. Latto, 702 F. Supp. 708, 709 (N.D. Ill. 1989) (no Illinois Dram Shop Act liability for holders "of mere naked title").
The concepts of ownership codified in federal law and recognized by the Supreme Court would not include Illinois land trustees as owners. For example, in taxing trusts, the United States looks to the amount of control exerted by a trustee to determine ownership. See 26 U.S.C. §§ 671-78. The Supreme Court has also outlined an approach for determining ownership for taxation purposes:
The Court has looked to the objective economic realities of a transaction rather than to the particular form the parties employed. The Court has never regarded the simple expedient of drawing up papers as controlling for tax purposes when the objective economic realities are to the contrary. In the field of taxation, administrators of the laws, and the courts, are concerned with substance and realities, and formal written documents are not rigidly binding.
Frank Lyon Co. v. United States, 435 U.S. 561, 573, 55 L. Ed. 2d 550, 98 S. Ct. 1291 (1978) (citations omitted). Certainly, being a trustee to an Illinois land trust -- a legal relationship that carries absolutely no interest whatsoever in the res and allows no control over the res -- is not ownership under these pragmatic federal standards.
Concluding that an Illinois land trustee is an "owner" would not promote the goals of CERCLA. While this conclusion would provide an extraordinarily deep pocket -- here, Northern Trust made under $ 2,000 for being trustee for more than 20 years, but CERCLA could impose over $ 800,000 in liability -- it would not serve CERCLA's primary goal of making those who are responsible for or who benefitted from environmental damage foot the bill. See Mardan Corp. v. C.G.C. Music, Ltd., 804 F.2d 1454, 1455 (9th Cir. 1986). Whereas congress might have made owners strictly liable because ownership is generally a good proxy for responsibility, paper ownership like that of an Illinois land trustee is wholly unrelated to responsibility. Moreover, as trustees have absolutely no control over the land, "deterring" them with harsh penalties would not result in more CERCLA compliance. Recognizing that trustee liability does not serve the legislative ends of CERCLA, the EPA does not consider trustees liable. See 57 Fed. Reg. 18,349 (Apr. 29, 1992) ("innocent trustees or fiduciaries are not liable under CERCLA").
Taking into account the implications of being a trustee to a land trust under Illinois law, the concepts of ownership under federal and Illinois law, and the legislative purposes of CERCLA, the court concludes that being an Illinois land trustee is not "owning" land under Section 9607(a)(2). Accord United States v. NL Industries, 1992 U.S. Dist. LEXIS 17207, slip op. (S.D. Ill. 1992) (undertaking careful statutory analysis and reaching same result on identical question). As it is undisputed that being the trustee was Northern Trust's only connection to the Petersen, Inc. site, see Petersen, Inc. 12(n) to Northern Trust P 8, Northern Trust is not liable under CERCLA as a matter of law. Northern Trust's motion for summary judgment is granted.
The summary judgment motions of Commonwealth Edison Company, American Fly Ash Company, The Tewes Company of Libertyville, Inc., and Northern Trust Bank/Lake Forest N.A. are granted. The summary judgment motions of the United States, Skokie Valley Asphalt Co, Inc. and Lake County Forest Preserve District are denied.
Suzanne B. Conlon
United States District Judge
October 7, 1992