Riverside Mkt. Development Corporation v. International Building Prods., Inc.

United States Court of Appeals for the Fifth Circuit · 1991 · Corporations

931 F.2d 327 (5th Cir. 1991)

Updated August 22, 2026

CorporationsCERCLAOfficer liabilityLimited liabilityowner or operatorcorporate officer liabilityshareholder liabilitysummary judgment

Facts

IBP, a Delaware corporation, bought an asbestos manufacturing plant from National Gypsum in 1981 and continued operating it until 1985. Prescott owned eighty-five percent of IBP's stock and served as secretary, consultant, and chairman of the board, but he lived in New York and visited the New Orleans facility only two to four times a year for limited purposes such as the Christmas party, an industry meeting, and brief visits with executives. His involvement consisted of reviewing financial statements and consulting at officers' meetings, while the president, von Dohlen, handled day-to-day operations and spent substantial time at the plant. After the plant closed, the developers bought the site at a reduced price in exchange for undertaking demolition and asbestos cleanup, then sought to recover cleanup costs from Prescott under CERCLA.

Issue

Can a majority shareholder and corporate officer be held personally liable under CERCLA as an "owner or operator" of a facility owned by the corporation where the evidence shows only stock ownership, officer status, infrequent visits, and limited financial oversight? More specifically, did the plaintiffs produce sufficient evidence that Prescott personally participated in conduct violating CERCLA?

Rule

Under CERCLA, a shareholder is not an "owner" of a facility merely because he owns stock in the corporation that owns the property. An individual officer, director, or employee may be personally liable as an "operator" only when he actually personally participates in the wrongful conduct prohibited by CERCLA; courts look to the extent of the defendant's personal participation, and sparse evidence of officer status, financial review, and occasional visits is insufficient.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

Lakefront Renewal LLC bought a former chemical blending site in Toledo, Ohio and spent substantial sums removing contaminated soil. It sued Nolan Pierce, who owned 92% of Harbor Line Materials, Inc., the corporation that had held title to the site during the years of disposal. Pierce never held title personally, but he argues that stock ownership alone cannot make him an owner of the facility.

Under the governing rule, is Pierce most likely personally liable as an "owner" of the facility?

Explanation. The majority rule is that corporate property belongs to the corporation, not its stockholders. So even majority stock ownership does not by itself make an individual an "owner" of the facility under CERCLA when title was held by the corporate entity. The case does not create blanket immunity for shareholders; it simply rejects owner status based on stock ownership alone.