A federal court in Illinois has dismissed a claim filed by the U.S. Environmental Protection Agency (EPA) under the Comprehensive Environmental Response, Compensation and Liability Act (CERCL A) against the possible owner of a contaminated site in Chicago, ruling that the claim was barred by the statute of limitations United States v. Capital Tax Corp., No. 04-4138 (N.D. Ill. 4/16/12).
The named defendant, Capital Tax Corp., acquired the former site of a paint factory at an undisclosed time. In 2004, EPA spent more than $2 million removing hazardous substances from the site and later the same year filed a CERCL A lawsuit against Capital Tax and three individuals to recover its response costs. At trial, Capital Tax admitted owning the site.
After the trial court found Capital Tax liable as an owner, the company appealed to the Seventh Circuit, arguing that it had reached an agreement with an individual, Marvin Dukatt, to sell the property to him, and was therefore, not the owner. Dukatt denied there was an agreement. The appeals court remanded the case for consideration of whether Capital Tax and Dukatt “entered a valid, oral agreement for the purchase” of the site, “such that an equitable conversion had occurred . . . .” In an affidavit, Dukatt said he had reached agreement with Capital Tax but had reneged after EPA became involved.
In March 2010, the United States amended the complaint to add Dukatt as a defendant. Dukatt then moved for summary judgment, arguing that the government’s claims were time-barred. The government argued that Dukatt should be equitably stopped from asserting the statute of limitations or that the statute should be equitably tolled because Dukatt did not deny entering an agreement with Capital Tax until after the statute had run.
Ruling for Dukatt, the court held that for equitable tolling to be appropriate, plaintiff must show “(1) that he has been pursuing his rights diligently, and (2) that some extraordinary circumstance stood in his way and prevented his filing.” For equitable estoppel to apply, the government would have to show (1) improper conduct by Dukatt; and (2) that it actually and reasonably relied on his conduct. The court ruled that equitable tolling was not factually justified and that, as to equitable estoppel, the government never asserted that it relied on Dukatt’s assertions.