Property Management Services Company Not Liable as "Owner" under CERCLA, but Could be Liable as an "Operator"

December 8, 2009
Client Alert Newsletter December 2009

In Scarlett & Assoc., Inc. v. Briarcliff Center Partners, the U.S. District Court for the Northern District of Georgia held on summary judgment that under both Georgia law and federal common law, the property management services company for a shopping center contaminated by a dry cleaning business was not responsible for the contamination as an "owner" of the center under the Comprehensive Environmental, Response, Compensation and Liability Act ("CERCLA"). The defendant could not sign leases, evict tenants or spend significant sums of money without authorization and therefore, did not have the characteristics of an owner. However, the Court held that there may be enough evidence to let the case proceed on a theory that the management company was an "operator" of the dry cleaning business under CERCLA. The district court held that under the Supreme Court's decision in Best Foods, the fact that the property manager once advised the dry cleaning tenant of reporting obligations to the U.S. Environmental Protection Agency and requested documentation of compliance with these requirements, may have raised the management company's status to that of an "operator" under CERCLA with the requisite level of involvement in the environmental affairs of the dry cleaner.