Jump to Navigation
Jump to Content

Marsh v. Rosenbloom

ELR Citation: 37 ELR 20221
Nos. Nos. 05-0514 et al., (2d Cir., 08/28/2007)

The Second Circuit affirmed in part and reversed in part a lower court decision dismissing New York's Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) claims against the shareholder-distributees of a dissolved Delaware corporation but denying the corporation trustees' motion to dismiss the state's CERCLA claims against the corporation. The lower court properly dismissed the state's claims against the shareholder-distributees. The state relied on the equitable law trust fund doctrine, which allows claimants against a dissolved or insolvent corporation to follow the distributed assets of the corporation into the hands of its shareholders in order to satisfy the corporation's liability. The state argued that the doctrine permits claims against dissolved corporations to go forward with no special time limit. But modern statutory remedies have effectively replaced the trust fund doctrine. Here, given the absence of a significant conflict between Delaware law and CERCLA's goals, Delaware General Corporation Law §§278 and 325(b) govern the shareholder-distributees' amenability to the state's CERCLA claims. Consequently, the state's CERCLA claims are barred. But the court erred in denying the corporation trustees' motion to dismiss. CERCLA does not preempt Delaware's limits on the corporation's capacity to be sued. The lower court's judgment in favor of the state on its CERCLA claims against the trustees was therefore reversed.