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Federal Court Rules that Statute of Limitations Bars CERCLA Claims Against Dissolved Corporation and Its Insurers

04.01.2008

By Andy Bowman, Attorney, Bingham Greenebaum Doll LLP

The United States District Court for the Southern District of Indiana has recently ruled that a claim brought under the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”) against a dissolved corporation to recover clean-up costs for environmental contamination caused by prior property owners is barred by the two-year statute of limitations governing claims against dissolved corporations. The Court further ruled that claims against insurance companies which provided coverage to the dissolved corporation are also barred by the two-year statute of limitations. Sanyo North America Corp. v. Absocold Corp., S.D. Ind., Case No. 1:06-CV-0405-LJM-WTL (March 6, 2008).

The Court also held that the dissolved corporation’s failure to provide notices of dissolution to creditors, the Indiana Department of Revenue, the Indiana Employment Security Division and the Unclaimed Property Section of the Attorney General as required by the corporate dissolution statute, Indiana Code 23-1-45 did not defeat the two-year statute of limitations. Id. at p. 6.

Sanyo had purchased property in Richmond, Indiana from Design and Manufacturing Corporation (“D&M”) in 1986. D&M voluntarily dissolved and ceased to exist in 1990. Sanyo incurred clean-up costs to address environmental contamination alleged to have resulted from D&M’s and other prior businesses’ operations before 1986. Sanyo brought claims under CERCLA in 2006.

The Court followed the Seventh Circuit Court of Appeals decision in Citizens Electric v. Bituminous Fire and Marine Insurance Co., 68 F. 3d 1016 (7th Cir. 1995) and rejected Sanyo’s argument that the public policy purposes of CERCLA should trump Indiana’s right to set limitations on claims against dissolved corporations. Id. at p. 7.

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