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Monarch Tile, Inc. v. Florence, City of

Citation: 30 ELR 20600
No. No. 99-11372, 212 F.3d 1219/50 ERC 1641/(11th Cir., 05/25/2000)

The court holds that a city holding a security interest in property for the purpose of securing repayment of development bonds, which financed acquisition of the property, qualifies for a Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) § 101(20)(A) secured creditor exception to CERCLA liability. In 1952, the city purchased the property at issue and leased it to a manufacturer in order to promote economic development. Subsequently, the manufacturer sought contribution from the city for the cost of cleaning up hazardous substances discharged to the land by the manufacturer. The court first holds that the city qualifies for CERCLA § 101(20)(A)'s secured creditor exception. The city holds indicia of ownership to protect a security interest, and that security interest fell within CERCLA § 101(20)(G)(vi)'s definition of "security interest" applicable to CERCLA § 101(20)(A)'s secured creditor exception. Further, a state law that limits municipal purchases of property to those necessary for public purposes does not preclude the city from arguing that it held title to protect a security interest. In addition, the city acquired the property to spur industrial development, but subsequently held title to ensure that the manufacturer's bonds were backed by adequate security. The fact that the city's initial motivation for purchasing land was to further economic development will not preclude it from qualifying for the secured creditor exception as long as it holds indicia of ownership primarily to protect its security interest in the property during the period when the pollution occurs.

Counsel for Plaintiff
Kenneth Anspach
Anspach & Associates
111 W. Washington St., Ste. 1435, Chicago IL 60602
(312) 407-7888

Counsel for Defendant
Frederick L. Hitchcock
Strang, Fletcher, Carriger, Walker, Hodge & Smith
400 Krystal Bldg.
One Union Sq., Chattanooga TN 37402
(423) 265-2000

Before Anderson and Black, JJ.