B O S T O N H A R T F O R D N E W L O N D O N S T A M F O R D G R E E N W I C H N E W Y O R K Case...
-
Upload
sara-gerald -
Category
Documents
-
view
215 -
download
3
Transcript of B O S T O N H A R T F O R D N E W L O N D O N S T A M F O R D G R E E N W I C H N E W Y O R K Case...
![Page 1: B O S T O N H A R T F O R D N E W L O N D O N S T A M F O R D G R E E N W I C H N E W Y O R K Case Law Updates on Lender and Fiduciary Liability Presented.](https://reader035.fdocuments.in/reader035/viewer/2022070308/551bfb95550346b24f8b4983/html5/thumbnails/1.jpg)
B O S T O N • H A R T F O R D • N E W L O N D O N • S T A M F O R D • G R E E N W I C H • N E W Y O R K
Case Law Updates on Lenderand Fiduciary Liability
Presented by Richard M. Fil, Esq.EBA Conference, St. Paul, MN
June 2002
![Page 2: B O S T O N H A R T F O R D N E W L O N D O N S T A M F O R D G R E E N W I C H N E W Y O R K Case Law Updates on Lender and Fiduciary Liability Presented.](https://reader035.fdocuments.in/reader035/viewer/2022070308/551bfb95550346b24f8b4983/html5/thumbnails/2.jpg)
Background
• Potential Liability as Owner / Operator
• Pre-1996 Case Law
![Page 3: B O S T O N H A R T F O R D N E W L O N D O N S T A M F O R D G R E E N W I C H N E W Y O R K Case Law Updates on Lender and Fiduciary Liability Presented.](https://reader035.fdocuments.in/reader035/viewer/2022070308/551bfb95550346b24f8b4983/html5/thumbnails/3.jpg)
EPA Regulations / Guidance
• EPA’s lender liability regulations
• Treatment by the courts
• EPA / DOJ response
![Page 4: B O S T O N H A R T F O R D N E W L O N D O N S T A M F O R D G R E E N W I C H N E W Y O R K Case Law Updates on Lender and Fiduciary Liability Presented.](https://reader035.fdocuments.in/reader035/viewer/2022070308/551bfb95550346b24f8b4983/html5/thumbnails/4.jpg)
Asset Conservation, Lender Liability, and Deposit Insurance Protection Act of 1996
• More clearly defines exemption under definition of “owner or operator”
– Must hold “indicia of ownership primarily to protect the security interest”
– Defines “participation in management” of the facility
![Page 5: B O S T O N H A R T F O R D N E W L O N D O N S T A M F O R D G R E E N W I C H N E W Y O R K Case Law Updates on Lender and Fiduciary Liability Presented.](https://reader035.fdocuments.in/reader035/viewer/2022070308/551bfb95550346b24f8b4983/html5/thumbnails/5.jpg)
Acts Which May Trigger Liability
• May avoid liability UNLESS the person:
– Actually participates in the management or operational affairs (not mere capacity to do so)
– Undertakes decisionmaking control over environmental compliance
– Exercises control comparable to a manager
![Page 6: B O S T O N H A R T F O R D N E W L O N D O N S T A M F O R D G R E E N W I C H N E W Y O R K Case Law Updates on Lender and Fiduciary Liability Presented.](https://reader035.fdocuments.in/reader035/viewer/2022070308/551bfb95550346b24f8b4983/html5/thumbnails/6.jpg)
Exceptions to Definition of “Participate in Management”
• Abandoning or releasing an interest
• Requiring environmental compliance, including appropriate response actions
• Monitoring or inspecting property
• Providing financial advice
• Restructuring terms and conditions of the security interest
![Page 7: B O S T O N H A R T F O R D N E W L O N D O N S T A M F O R D G R E E N W I C H N E W Y O R K Case Law Updates on Lender and Fiduciary Liability Presented.](https://reader035.fdocuments.in/reader035/viewer/2022070308/551bfb95550346b24f8b4983/html5/thumbnails/7.jpg)
Avoiding Liability Through Foreclosure
• At the “earliest practicable, commercially reasonable time, on commercially reasonable terms”:
– Sell, re-lease, or liquidate the property; or
– Prior to sale or disposition:
• Maintain business activities, wind up operations, or undertake certain response actions, or
• Take “any other measures to preserve, protect, or prepare” the facility for sale
![Page 8: B O S T O N H A R T F O R D N E W L O N D O N S T A M F O R D G R E E N W I C H N E W Y O R K Case Law Updates on Lender and Fiduciary Liability Presented.](https://reader035.fdocuments.in/reader035/viewer/2022070308/551bfb95550346b24f8b4983/html5/thumbnails/8.jpg)
Other Definitions
• Extension of credit
• Financial or administrative function
• Foreclosure
• Lender
• Financial or administrative function
• Operational function
• Security interest
![Page 9: B O S T O N H A R T F O R D N E W L O N D O N S T A M F O R D G R E E N W I C H N E W Y O R K Case Law Updates on Lender and Fiduciary Liability Presented.](https://reader035.fdocuments.in/reader035/viewer/2022070308/551bfb95550346b24f8b4983/html5/thumbnails/9.jpg)
RCRA Implications
• Similar exclusions from potential liability related to sites with USTs
• Person must not “otherwise [be] engaged in petroleum production, refining, or marketing”
![Page 10: B O S T O N H A R T F O R D N E W L O N D O N S T A M F O R D G R E E N W I C H N E W Y O R K Case Law Updates on Lender and Fiduciary Liability Presented.](https://reader035.fdocuments.in/reader035/viewer/2022070308/551bfb95550346b24f8b4983/html5/thumbnails/10.jpg)
Protection of Fiduciaries
• Exemptions also provided for “fiduciaries” (trustees, executors, custodians)
• Does not apply to negligence causing or contributing to a release
• Does not apply to trusts created to maintain business activities for profit
• Does not apply to a person acquiring ownership or control to avoid liability
![Page 11: B O S T O N H A R T F O R D N E W L O N D O N S T A M F O R D G R E E N W I C H N E W Y O R K Case Law Updates on Lender and Fiduciary Liability Presented.](https://reader035.fdocuments.in/reader035/viewer/2022070308/551bfb95550346b24f8b4983/html5/thumbnails/11.jpg)
Other Caveats for Fiduciaries
• Protections do not apply to:
– Fiduciary who is a beneficiary and receives “extraordinary compensation”
– Acts outside of the fiduciary capacity
• Protection is limited to fiduciary; the assetsof the estate may be at risk
![Page 12: B O S T O N H A R T F O R D N E W L O N D O N S T A M F O R D G R E E N W I C H N E W Y O R K Case Law Updates on Lender and Fiduciary Liability Presented.](https://reader035.fdocuments.in/reader035/viewer/2022070308/551bfb95550346b24f8b4983/html5/thumbnails/12.jpg)
Current Guidance
• “Policy on Interpreting CERCLA Provisions Addressing Lenders and Involuntary Acquisitions by Government Entities,” 62 Fed. Reg. 36424 (July 7, 1997, effective June 30, 1997)
• “CERCLA Lender Liability Rule,” 57 Fed. Reg. 18344 (April 29, 1992)
![Page 13: B O S T O N H A R T F O R D N E W L O N D O N S T A M F O R D G R E E N W I C H N E W Y O R K Case Law Updates on Lender and Fiduciary Liability Presented.](https://reader035.fdocuments.in/reader035/viewer/2022070308/551bfb95550346b24f8b4983/html5/thumbnails/13.jpg)
Post-1996 Case Law
• Federal
• State
![Page 14: B O S T O N H A R T F O R D N E W L O N D O N S T A M F O R D G R E E N W I C H N E W Y O R K Case Law Updates on Lender and Fiduciary Liability Presented.](https://reader035.fdocuments.in/reader035/viewer/2022070308/551bfb95550346b24f8b4983/html5/thumbnails/14.jpg)
The Top 10 Reasons You Are Still Vital to Your Institution
10. Guidelines for exemptions must still be followed
Keep reading the statute
Avoid control over waste handling and decision-making
Dispose of property as directed
EPA guidance is not binding
![Page 15: B O S T O N H A R T F O R D N E W L O N D O N S T A M F O R D G R E E N W I C H N E W Y O R K Case Law Updates on Lender and Fiduciary Liability Presented.](https://reader035.fdocuments.in/reader035/viewer/2022070308/551bfb95550346b24f8b4983/html5/thumbnails/15.jpg)
The Top 10 Reasons You Are Still Vital to Your Institution
9. Burden of proof is on party claiming exemption
Need to prepare and document efforts / compliance
Overcome “broad remedial purpose” of CERCLA
![Page 16: B O S T O N H A R T F O R D N E W L O N D O N S T A M F O R D G R E E N W I C H N E W Y O R K Case Law Updates on Lender and Fiduciary Liability Presented.](https://reader035.fdocuments.in/reader035/viewer/2022070308/551bfb95550346b24f8b4983/html5/thumbnails/16.jpg)
The Top 10 Reasons You Are Still Vital to Your Institution
8. Fiduciary Negligence
Get to know your private bankers
Let them know what you can do for them
![Page 17: B O S T O N H A R T F O R D N E W L O N D O N S T A M F O R D G R E E N W I C H N E W Y O R K Case Law Updates on Lender and Fiduciary Liability Presented.](https://reader035.fdocuments.in/reader035/viewer/2022070308/551bfb95550346b24f8b4983/html5/thumbnails/17.jpg)
The Top 10 Reasons You Are Still Vital to Your Institution
7. Angry and Litigious Beneficiaries
Assets of estate / trust still at risk
Beneficiaries may pursue recovery of lost assets
![Page 18: B O S T O N H A R T F O R D N E W L O N D O N S T A M F O R D G R E E N W I C H N E W Y O R K Case Law Updates on Lender and Fiduciary Liability Presented.](https://reader035.fdocuments.in/reader035/viewer/2022070308/551bfb95550346b24f8b4983/html5/thumbnails/18.jpg)
The Top 10 Reasons You Are Still Vital to Your Institution
6. Limited Case Law
New statute; not many cases decided
Lack of clear precedent may result in significant variations
Banks are still attractive defendants
![Page 19: B O S T O N H A R T F O R D N E W L O N D O N S T A M F O R D G R E E N W I C H N E W Y O R K Case Law Updates on Lender and Fiduciary Liability Presented.](https://reader035.fdocuments.in/reader035/viewer/2022070308/551bfb95550346b24f8b4983/html5/thumbnails/19.jpg)
The Top 10 Reasons You Are Still Vital to Your Institution
5. Potential Liability Under Other Federal Programs
TSCA
RCRA
CWA
![Page 20: B O S T O N H A R T F O R D N E W L O N D O N S T A M F O R D G R E E N W I C H N E W Y O R K Case Law Updates on Lender and Fiduciary Liability Presented.](https://reader035.fdocuments.in/reader035/viewer/2022070308/551bfb95550346b24f8b4983/html5/thumbnails/20.jpg)
The Top 10 Reasons You Are Still Vital to Your Institution
4. Potential Gaps Under State Law
Most states have similar exemptions, but variations may exist in:
• Language
• Application / interpretation
Other forms of liability may attach
• Lead paint
• Consumer protection
Increasing role of states in enforcement actions
![Page 21: B O S T O N H A R T F O R D N E W L O N D O N S T A M F O R D G R E E N W I C H N E W Y O R K Case Law Updates on Lender and Fiduciary Liability Presented.](https://reader035.fdocuments.in/reader035/viewer/2022070308/551bfb95550346b24f8b4983/html5/thumbnails/21.jpg)
The Top 10 Reasons You Are Still Vital to Your Institution
3. Common Law Claims
Exemptions do not necessarily negate common law claims
Often joined with state and/or federal statutory claims for a “belt and suspenders” approach
![Page 22: B O S T O N H A R T F O R D N E W L O N D O N S T A M F O R D G R E E N W I C H N E W Y O R K Case Law Updates on Lender and Fiduciary Liability Presented.](https://reader035.fdocuments.in/reader035/viewer/2022070308/551bfb95550346b24f8b4983/html5/thumbnails/22.jpg)
The Top 10 Reasons You Are Still Vital to Your Institution
2. Limitations on Insurance Coverage
Limits may not cover all claims
Policy / exclusions may not cover all types of claims
Voluntary action may be prudent to limit overall costs
Existing coverage may lapse / no longer be available in the future
![Page 23: B O S T O N H A R T F O R D N E W L O N D O N S T A M F O R D G R E E N W I C H N E W Y O R K Case Law Updates on Lender and Fiduciary Liability Presented.](https://reader035.fdocuments.in/reader035/viewer/2022070308/551bfb95550346b24f8b4983/html5/thumbnails/23.jpg)
The Top 10 Reasons You Are Still Vital to Your Institution
1. Nuisance Value / Avoiding Litigation
Number of reported cases are far fewer than those brought or settled
Following the considerations noted above will better position your institution to more favorably resolve claims