A federal court in California has dismissed a CERCLA contribution action against the trustee of a real estate trust that, from 1989 to 1996, owned a shopping center contaminated with perchloroethylene (PCE) in soil and groundwater. Palmtree Acquisition Corp. v. Neely, No. 08‑3168 (N.D. Cal. 2/11/11).

Plaintiff alleged that the trustee, who also separately acted as chair of the company that oversaw the cleanup, violated his fiduciary duty to the trust by failing to reserve trust assets for future cleanup costs. Defendant filed a motion to dismiss, arguing that the trustee was not personally liable under CERCLA. In October 2010, the court agreed, dismissing the complaint without prejudice. Plaintiffs filed an amended complaint later in the same month citing section 107(n)(1) of CERCLA, which states:

The liability of a fiduciary under any provision of this chapter for the release or threatened release of a hazardous substance at, from, or in connection with a vessel or facility held in a fiduciary capacity shall not exceed the assets held in the fiduciary capacity.

Again the court disagreed with plaintiffs, ruling that plaintiff failed to establish a breach of the fiduciary duty. According to the court, “[s]erving the trust in a dual capacity is not enough to show that he was acting outside his fiduciary capacity in such a way as to impose personal liability under CERCLA.”