                                                                                                                           Opinions of the United
1994 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


10-20-1994

Witco v. Beekhuis
Precedential or Non-Precedential:

Docket 93-7837




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Recommended Citation
"Witco v. Beekhuis" (1994). 1994 Decisions. Paper 161.
http://digitalcommons.law.villanova.edu/thirdcircuit_1994/161


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                 UNITED STATES COURT OF APPEALS
                     FOR THE THIRD CIRCUIT



                          No. 93-7837


                       WITCO CORPORATION,

                                          Appellant
                                 v.

                JEANNE V. BEEKHUIS, Executrix for
                the Estate of H. Albert Beekhuis;
                  BRANDYWINE CHEMICAL COMPANY;
            WILMINGTON TRUST COMPANY, as Trustee for
            the Trust Agreement dated August 9, 1985
           between H. Albert Beekhuis and Wilmington
             Trust Company; and Jeanne V. Beekhuis,
                           individually



          Appeal from the United States District Court
                  for the District of Delaware
                   (D.C. Civ. No. 92-cv-00301)



                      Argued August 10, 1994
               Before: MANSMANN, COWEN and McKEE,
                          Circuit Judges

                    (Filed October 21, 1994)



Judith N. Renzulli (Argued)
Kevin W. Goldstein
Duane, Morris & Heckscher
1201 Market Street, Suite 1500
P.O. Box 195
Wilmington, DE 19899

          COUNSEL FOR WITCO CORPORATION
                         Appellant
James F. Burnett (Argued)
Potter, Anderson & Corroon
350 Delaware Trust Building
P.O. Box 951
Wilmington, DE 19899

          COUNSEL FOR JEANNE V. BEEKHUIS,
          Executrix for the Estate of
          H. Albert Beekhuis
                         Appellee

Thomas R. Hunt, Jr.
R. Judson Scaggs, Jr. (Argued)
Morris, Nichols, Arsht & Tunnell
1201 North Market Street
P.O. Box 1347
Wilmington, DE 19899

          COUNSEL FOR WILMINGTON TRUST COMPANY,
          AS Trustee for the Trust Agreement
          dated August 9, 1985 between
          H. Albert Beekhuis and Wilmington
          Trust Company
                         Appellee




                              OPINION


COWEN, Circuit Judge.



          In this action for contribution under the Comprehensive

Environmental Response, Compensation and Liability Act, 42 U.S.C.

§§ 9601, et seq., ("CERCLA"), Witco Corporation ("Witco") asserts

its claim against: Jeanne V. Beekhuis (daughter of Dr. H. Albert

Beekhuis and executrix for his estate); Wilmington Trust Company

("WTC") (trustee of two trusts created by Dr. Beekhuis); and

Brandywine Chemical Company ("Brandywine Chemical")

(collectively, "the defendants").
          Witco's claim relates to a parcel of land ("the site")

previously owned by Halby Products and Halby Chemical Company

(collectively, "Halby").   Dr. Beekhuis was an officer, director

and majority stockholder of Halby.   The site became Witco's

property in 1972 when Halby merged into Witco's subsidiary.     In

1977, the site was sold to Brandywine Chemical.   Thereafter,

because the site was contaminated with various chemicals, the

U.S. Environmental Protection Agency ("EPA") placed the site on

the CERCLA National Priorities List.

          In 1992, Witco entered into a Consent Decree with the

EPA to provide for the cleanup of the site.   Witco now seeks

contribution from the defendants for the costs associated with

cleaning the site.   Witco's claim against Jeanne Beekhuis is in

her representative capacity as executrix of the estate of Dr.

Beekhuis, and its claim against WTC is in its capacity of

trustee, charged with the responsibility of paying the debts of

the estate of Dr. Beekhuis.

          The district court entered two orders which are at

issue in this appeal.   In the first order dated May 20, 1993, the

court held that the CERCLA statute of limitations for

contribution did not preempt Delaware probate law.   In a second

order dated November 24, 1993, the district court held that the

Estate was entitled to statutory indemnification from Witco.

Although these two orders did not terminate the litigation, the

district court by order entered on November 29, 1993, directed

that judgment be entered on both orders.   See Fed. R. Civ. P.

54(b).
          This appeal raises one issue of first impression at the

federal appellate level, and one issue of first impression in the

Court of Appeals for the Third Circuit.    The former is whether

the three-year statute of limitations established by Congress for

contribution claims under CERCLA preempts state nonclaim statutes

that govern the administration of decedents' estates.    The latter

issue is whether under CERCLA an estate of a "potentially

responsible party" can properly establish an indemnity claim

pursuant to Delaware General Corporation Law.   We hold that

CERCLA does not preempt state nonclaim statutes, and will affirm

the order of the district court granting summary judgment to the

defendants.   We also hold that statutory indemnification pursuant

to Delaware General Corporation Law is not affected by CERCLA,

and also will affirm the order of the district court granting

summary judgment on the issue of indemnification.



                                I.



          Dr. H. Albert Beekhuis was an officer, director and

majority shareholder of Halby Products and Halby Chemical

Company, both of which were Delaware corporations.   Halby

operated a chemical manufacturing and distribution business on

land it owned.    In 1972, Halby was merged into a Witco

subsidiary, Argus Chemical Company ("Argus"), which subsequently

was merged into Witco.   Witco is a Delaware corporation.    Argus

continued to use the site in its chemical business until it sold

the site to Brandywine Chemical in 1977.    From that time until
the present, Brandywine Chemical has used the site as a storage

and repackaging facility for chemicals.

           In August, 1985, Dr. Beekhuis entered into a trust

agreement creating two separate inter vivos trusts, with WTC as

the trustee for each trust.    The first trust, into which Dr.

Beekhuis placed substantially all of his assets, was to provide

for income and maintenance for Dr. Beekhuis and his dependents

during his lifetime.   It was also to provide his estate upon his

death with funds to pay debts and other expenses associated with

settling his estate.   The second trust was a residuary trust

which was funded by property remaining after the first trust had

been closed subsequent to the administration of his estate.

Jeanne Beekhuis, the daughter of Dr. Beekhuis, is the primary

life beneficiary of the residuary trust.    Upon her death, the

trust assets will be distributed to various charities.

           Witco has been aware of potential environmental

problems on the site since at least June of 1985, when the EPA

requested information from the company in connection with its

investigation of the site.    In April of 1986, Witco received a

Special Notice Letter from the EPA inviting it to perform a

Remedial Investigation/Feasibility Study (RI/FS) Report for the

site.   The EPA subsequently placed the site on the CERCLA

National Priorities List because it had detected various

hazardous chemicals, such as lead, mercury, cyanide and arsenic,

in the soil at the site.   In October of 1988, because of a

release or a substantial threat of a release of hazardous

substances at the site, the EPA commenced the RI/FS.
          On October 28, 1988, Witco notified Dr. Beekhuis of his

potential liability under CERCLA.      Witco also requested certain

insurance information from Dr. Beekhuis and informed him that the

EPA had already spent approximately $700,000 investigating the

site.   On January 21, 1989, Dr. Beekhuis responded through his

attorney by providing the requested insurance information.

          On March 21, 1989, Dr. Beekhuis died.      Jeanne Beekhuis,

Dr. Beekhuis' daughter, was appointed executrix of the estate.

Eight months later, after paying the debts of the estate and

after the Delaware statute of limitations for claims against the

estate had run, the trustee of the first trust placed all of the

property remaining in the first trust into the Residuary Trust.

Between the date of Dr. Beekhuis' death and November 21, 1989,

Witco took no action with respect to any possible CERCLA

contribution claim against the estate of Dr. Beekhuis.

          On January 18, 1990, Witco wrote to the lawyer for Dr.

Beekhuis' estate, apprising him of Witco's potential claim for

contribution, and seeking the imposition of a constructive trust

on the estate's assets pending resolution of the environmental

problem at the site.      The attorney advised Witco that it was

premature to request the imposition of a constructive trust as no

claim had yet been asserted by the EPA against Witco.

          On December 4, 1990, Witco filed in Delaware state

court a petition for a constructive trust on the assets in Dr.

Beekhuis' estate.   The court dismissed the action for failure to

state a claim.   In re:    Estate of H. Albert Beekhuis, No. 11,853,

1992 WL 5689 (Del. Ch. Jan. 13, 1992).
            On June 28, 1991, the EPA published its Final Record of

Decision ("ROD") recommending remedial action for the site.      The

ROD recommended excavation, stabilization, backfill, and capping

of contaminated surface soil at the site.    In August of 1991, the

EPA notified Witco, Argus, Brandywine Chemical, and the estate of

Dr. Beekhuis that each was a potentially responsible party

("PRP") for the discharge of hazardous waste at the site.    Each

party named as a PRP was given the opportunity to participate in

the planned remedial process for the site.    Witco subsequently

executed a Consent Decree with the EPA for the remediation of the

contaminated soil.    United States v. Witco Corp., Consent Decree,

C.A. 92-93 (D. Del. April 9, 1992).    Pursuant to the Consent

Decree and the ROD, Witco has incurred remedial response costs

and expenses for the site.

            After executing a consent decree with the EPA for

remediation of the site, Witco filed its claim and thereafter its

amended claim for contribution against Jeanne Beekhuis, as

executrix of the estate; WTC, as trustee; and Brandywine

Chemical.   The Executrix filed an answer and an amended answer to

the amended complaint asserting a counterclaim against Witco for

indemnification for all expenses, including attorney's fees

incurred in connection with this action, the civil action in the

Delaware state court, and any threatened, pending or completed

EPA actions, suits, or proceedings.

            The district court granted the motions of the Executrix

and WTC for summary judgment on the CERCLA contribution claims.

Witco Corp. v. Beekhuis, 822 F.Supp. 1084 (D. Del. 1993).       In a
subsequent opinion, the district court granted the Executrix's

motion for summary judgment on the counterclaim against Witco for

indemnification.   Witco Corp. v. Beekhuis, Mem. Op., C.A. No. 92-

301-RRM (D. Del., Oct. 22, 1993).




                                  II.

                                  A.



           The district court exercised its jurisdiction pursuant

to 28 U.S.C. §§ 1331, 2201, and 2202, and under 42 U.S.C. §

9613(b).   We have appellate jurisdiction under 28 U.S.C. § 1291

and Fed. R. Civ. P. 54(b), in that this is an appeal from a final

judgment as to some but not all parties and issues involved in

the district court proceedings.    On November 24, 1993, the

district court entered final judgment on these two orders which

are before us for review pursuant to Fed. R. Civ. P. 54(b).



                                  B.



           Federal Rule of Civil Procedure 56(c) provides that a

party is entitled to summary judgment where "the pleadings,

depositions, answers to interrogatories, and admissions on file,

together with the affidavits, if any, show that there is no

genuine issue as to any material fact and that the moving party

is entitled to a judgment as a matter of law."    Celotex Corp. v.
Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 2552 (1986).      A
party seeking summary judgment always bears the initial

responsibility of informing the Court of the basis for its

motion, and identifying those portions of the "the pleadings,

depositions, answers to interrogatories, and admissions on file,

together with the affidavits, if any, which it believes

demonstrate the absence of a genuine issue of material fact."

Id. at 323, 106 S. Ct. at 2553.   Where, as here, the non-moving

party has the burden of proof at trial on the issue for which

summary judgment is sought, that party must make a showing

sufficient to establish the existence of a genuine issue for

trial.   Id. at 324, 106 S. Ct. at 2553.   Moreover, the mere

existence of some evidence in support of the non-moving party

will not be sufficient to support a denial of a motion for

summary judgment; there must be enough evidence to enable a jury

to reasonably find for the non-moving party on the issue.

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S. Ct.

2505, 2511 (1986).



                               III.



          In support of their motions for summary judgment,

defendants contend that the Delaware nonclaim statute, Title 12,

§ 2102, applies in this case, and is a complete bar to the claim

for contribution. Section 2102(a) provides, in pertinent part:
          All claims against a decedent's estate which
          arose before the death of the decedent . . .
          whether due or to become due, absolute or
          contingent, liquidated or unliquidated,
          founded on contract, tort or other legal
           basis . . . are barred against the estate,
           the personal representative and the heirs and
           devisees of the decedent unless presented as
           provided in § 2104 of this title within 8
           months of the decedent's death whether or not
           the notice referred to in § 2101 of this
           title has been given.


Del. Code Ann. tit. 12, § 2102(a) (1992) (emphasis added).

           Defendants argue that because Witco failed to present

its contingent CERCLA contribution claim to the executrix of Dr.

Beekhuis' estate by November 21, 1989, eight months after Dr.

Beekhuis' death, the claim is now forever barred under the

Delaware nonclaim statute.

           Witco contends, however, that the CERCLA limitations

period for contribution claims of three years from the date of

judgment or a judicially approved settlement applies to this

case.   42 U.S.C. § 9613(g)(3) provides, in pertinent part:
           (3) Contribution
           No action for contribution for any response
           costs or damages may be commenced more than 3
           years after --
                (A) the date of judgment in any
                action under this chapter for
                recovery of such costs or damages,
                or
                (B) the date of . . . entry of a
                judicially approved settlement with
                respect to such costs or damages.

42 U.S.C. § 9613(g)(3) (1988).


           Accordingly, Witco argues that it had three years from

April 29, 1992, the date of the Consent Decree, to file its

CERCLA contribution claim.   Since Witco filed its claim on May

25, 1992, it contends that it is within the CERCLA limitations

period.   Witco further asserts that to the extent the two
statutes conflict, the CERCLA statute of limitations preempts the

Delaware nonclaim statute.

          The United States Supreme Court in California Federal

Sav. and Loan Ass'n v. Guerra, 479 U.S. 272, 107 S. Ct. 683

(1987) has provided a cogent analysis of when a state law may be

preempted by federal law. The Court wrote in that case:
          In determining whether a state statute is
          pre-empted by federal law and therefore
          invalid under the Supremacy Clause of the
          Constitution, our sole task is to ascertain
          the intent of Congress. Federal law may
          supersede state law in several different
          ways. First, when acting within
          constitutional limits, Congress is empowered
          to pre-empt state law by so stating in
          express terms. Second, congressional intent
          to pre-empt state law in a particular area
          may be inferred where the scheme of federal
          regulation is sufficiently comprehensive to
          make reasonable the inference that Congress
          "left no room" for supplementary state
          regulation . . . .
               As a third alternative, in those areas
          where Congress has not completely displaced
          state regulation, federal law may nonetheless
          pre-empt state law to the extent it actually
          conflicts with federal law. Such a conflict
          occurs either because "compliance with both
          federal and state regulations is a physical
          impossibility," or because the state law
          stands "as an obstacle to the accomplishment
          and execution of the full purposes and
          objectives of Congress."



Id. at 280-281, 107 S. Ct. at 689 (citations omitted) (emphasis

added).

          This Court has held that in enacting CERCLA Congress

has not explicitly preempted all state law on environmental

subject matter, nor has Congress enacted such a comprehensive
scheme of regulation as to provide no room for supplementation by

the states.     Manor Care, Inc. v. Yaskin, 950 F.2d 122, 125-26 (3d

Cir. 1991) (citing Exxon v. Hunt, 475 U.S. 355, 106 S. Ct. 1103

(1986)).   Thus, it is clear that neither the first nor the second

basis for preemption of state law under Guerra are present in

this case.

           Turning to the third basis for preemption of state law,

we must ask two questions in determining whether a state law

conflicts with federal law: (1) is it possible to comply with

both laws, and, (2) does the state law stand as an obstacle to

the intent of Congress?    Guerra, 479 U.S. at 281, 107 S. Ct. at

689.

             Before examining these two questions, it is important

to note that federal preemption of state law is not favored.

This is particularly true in areas of law traditionally dominated

by the individual states.    See English v. General Electric

Company, 496 U.S. 72, 79, 110 S. Ct. 2270, 2275 (1990) ("`[w]here

. . . the field which Congress is said to have pre-empted'

includes areas that have `been traditionally occupied by the

States,' congressional intent to supersede state laws must be

`"clear and manifest."'" (citing Jones v. Roth Packing Co., 430
U.S. 519, 525, 97 S. Ct. 1305, 1309 (1977), quoting Rice v. Santa

Fe Elevator Corp., 331 U.S. 218, 230, 67 S. Ct. 1146, 1152

(1947)).     In an area that has been traditionally occupied by the

states, the court must assume that the prerogatives of the states

was not to be superseded by a federal law unless it is the clear

and manifest purpose of Congress.    See Hillsborough County v.
Automated Medical Laboratories, Inc., 471 U.S. 707, 715-16, 105

S. Ct. 2371, 2376 (1985);   Rice v. Santa Fe Elevator Corp., 331

U.S. 218, 230, 67 S. Ct. 1146, 1152 (1947).    Indeed, for

preemption to occur in a field traditionally occupied by the

states, there must be a "sharp" conflict between state law and

federal policy.   See Boyle v. United Technologies Corp., 487 U.S.

500, 507, 108 S. Ct. 2510, 2516 (1988).    Since probate matters

traditionally have been nearly the exclusive concern of the

states, there is a presumption against preemption of state law.



          A. Is it possible to comply with both statutes?



           The district court correctly observed that in this

case, it was possible for Witco to comply with both the federal

and state statutes.    The provision in the Delaware nonclaim

statute, Title 12, § 2102, fixing an eight-month period for

filing a claim against an estate and the three-year period for

making a claim for contribution under CERCLA, are not mutually

exclusive.    One can notify an estate of a contingent claim within

eight months of a decedent's death, and also file a contribution

action within three years of the date of a judgment for response

costs.   The Delaware nonclaim statute expressly provides for a

mechanism that can be used to preserve contingent contribution

claims under CERCLA.    If a contingent claim is asserted but is

rejected by an executor, the claimant may petition the Delaware

Chancery Court for an extension of the time within which to file

that claim.   Del. Code Ann. tit. 12, § 2102(c) (1987).
          Witco knew in 1988 that it faced potential CERCLA

liability, and Witco believed that Dr. Beekhuis also was a

potentially responsible party.   When Dr. Beekhuis died on March

21, 1989, Witco had eight months within which to notify the

Executrix of Witco's contingent CERCLA contribution claim.     If

the Executrix rejected the claim or refused to consent to an

extension of the time to file the claim, Witco could have

petitioned the Court of Chancery to extend the time for pursuing

the claim.   Witco could have preserved its right to seek

contribution at a later date and thus comply with both statutes.

          We recognize that there will be instances where a PRP

seeking contribution will find it impossible to comply with both

a state nonclaim statute and the CERCLA statute of limitations.

For instance, a PRP may not become aware of his or her own CERCLA

liability until well after a state nonclaim statute has run.

Nevertheless, for the reasons that we discuss below, we conclude

that preemption is not appropriate.   In the context of

remediating the environment, we believe that the issue of whether

a nonclaim statute stands as an obstacle to congressional intent

is the more important inquiry.   Thus, while under certain

circumstances a nonclaim statute and the CERCLA statute of

limitations can be at odds, we do not foresee a substantial

impediment to the aims and objectives of CERCLA by our holding

today.


          B.Does the Delaware nonclaim statute stand as
              an obstacle to congressional intent?
          The purpose and objective of CERCLA is to provide the

federal government with broad powers to effectively respond to

existing and future problems associated with the disposal or

creation of hazardous wastes, and to ensure "that those

responsible for problems caused by the disposal of chemical

poisons bear the cost and responsibility for remedying the

harmful conditions they created."   United States v. Reilly Tar &

Chemical Corp., 546 F.Supp. 1100, 1112 (D. Minn. 1982).

          Three district courts have held that in the probate

context, state nonclaim statutes stand as an obstacle to

Congress' intent in enacting CERCLA.   In Freudenberg-NOK General

Partnership v. Thomopoulos, 1991 WL 325290, 1991 U.S. Dist. LEXIS

19421 (D.N.H. Dec. 9, 1991), the court without significant

discussion found CERCLA and the nonclaim statute in conflict.

Id. 1991 WL 325290 at *2, at *4.    After examining the legislative

history of CERCLA, the Thomopoulos court noted that Congress

intended CERCLA to be given a broad and liberal interpretation.

Thus, the court held that there was "little doubt as to Congress'

intent to preempt conflicting state statutes in responding to the

kinds of environmental hazards posed by" the site in question.

Id. 1991 WL 325290 at *4.   The courts in Soo Line R.R. Co. v.

B.J. Carney & Co., 797 F.Supp. 1472 (D. Minn. 1992) and Steego

Corp. v. Ravenal, 830 F.Supp. 42 (D. Mass. 1993) relied primarily

on the Thomopoulos decision in their holdings that CERCLA

preempted the respective state nonclaim statutes.
          We decline to adopt the holdings of Thomopoulos, Soo

Line, and Steego, but rather, we will affirm the holding of the

district court in this matter that Congress could not have

implicitly intended to preempt the Delaware nonclaim statute.

First, and most significantly, a state's interest in the prompt

settlement of its citizens' estates is particularly strong.

Probate law, like real estate law and domestic relations law, has

traditionally been within the province of the individual states.

Long-standing precedent recognizes that federal claims against

decedents' estates are subject to state probate laws and

procedures, unless federal law specifically provides otherwise.

See, e.g., Pufahl v. Estate of Parks, 299 U.S. 217, 225, 57 S.

Ct. 151, 156 (1936); Forrest v. Jack, 294 U.S. 158, 162-63, 55 S.

Ct. 370, 372 (1935).

          Nothing in the language of CERCLA suggests that

Congress intended to preempt state law governing claims against

decedents' estates.    Section 9613(f) of CERCLA authorizes

contribution actions against "any . . . person who is liable or

potentially liable under Section 9607(a) . . . ."    42 U.S.C. §

9613(f) (1988).   Section 9607(a) in turn, delineates four classes

of responsible parties upon whom liability is imposed: (1) the

current owners or operators of a contaminated property, (2)

owners or operators of the property at the time of hazardous

waste disposal, (3) persons who arrange for disposal or treatment

of hazardous substances at the property, and (4) persons who

accepted hazardous substances for transport to the property.       42

U.S.C. § 9607(a) (1988).    CERCLA does not contain any provision
that imposes liability directly upon the estates of those four

classes of responsible parties.   In light of the traditional

reluctance of Congress to preempt state laws which are of

significant importance to the states and traditionally within

their province, we decline to read into the CERCLA statute the

congressional intent to except CERCLA claims from state probate

laws and procedures.

          Second, by analogy, we can infer strong congressional

intent not to modify state probate law.   Congress expressly

endorsed traditional rules of property descent by creating an

exception to the CERCLA liability scheme called the "innocent

landowner defense" under Section 9607(b)(3).   Under traditional

probate law, after a decedent's personal representative pays the

decedent's debts and distributes any remaining property to

beneficiaries, creditors who fail to file timely claims lose

their right to collect from the estate, and property distributed

is not subject to creditors' claims.   Under the "innocent

landowner defense," a person who inherits contaminated property

thereby becoming an owner and a potentially responsible party

under CERCLA, is entitled to assert the innocent landowner

defense and escapes liability.    Congress created this exception

to CERCLA liability in order not to disturb state law controlling

the descent and distribution of property.   It would be illogical

for us to conclude that Congress impliedly preempted state

probate law to expand a CERCLA claimant's right to seek

contribution against property of a deceased potentially

responsible party, when Congress expressly narrowed CERCLA
liability with regard to the contaminated facility itself (in

order not to disturb the normal descent and distribution of real

property under state probate law).

           Third, we agree with the analysis of the district court

that Congress did not intend to modify state law governing

capacity of a party to be sued.   Witco Corp., 822 F.Supp. at

1089-90.   Section 9613(f) provides:
                (1) Contribution
                     Any person may seek
                contribution from any other person
                who is liable or potentially liable
                under section 9607(a) of this
                title, during or following any
                civil action under section 9606 of
                this title or under section 9607(a)
                of this title. Such claims shall
                be brought in accordance with this
                section and the Federal Rules of
                Civil Procedure, and shall be
                governed by Federal law.



42 U.S.C. § 9613(f) (1988) (emphasis added).

           Congress clearly mandated that courts follow the

Federal Rules of Civil Procedure when adjudicating CERCLA claims.

Rule 17(b) of the Federal Rules of Civil Procedure provides in

pertinent part: "The capacity of an individual, other than one

acting in a representative capacity, to sue or be sued shall be

determined by the law of the individual's domicile."   Fed. R.

Civ. P. 17(b).   As a result, state capacity statutes, as opposed

to liability statutes, are not preempted under CERCLA.   See Levin

Metals Corp. v. Parr-Richmond Terminal Co., 817 F.2d 1448, 1451

(9th Cir. 1987) (state statutes involving capacity to be sued,

such as statute governing the capacity of dissolved corporations
to be sued, are not preempted by CERCLA); United States v.

Northeastern Pharmaceutical & Chemical Co., 810 F.2d 726, 746

(8th Cir. 1986) (in a CERCLA action, "[t]he capacity of a

corporation to sue or be sued is determined by the law under

which it is organized"), cert. denied, 484 U.S. 848, 108 S. Ct.

146 (1987); City of Philadelphia v. Stepan Chem. Co., 713 F.Supp.

1491 (E.D. Pa. 1989) (city could not pursue CERCLA claim against

distributees of assets of corporation dissolved in accordance

with state law).    Thus, following Rule 17(b), we must look to

Delaware law to determine whether Witco, at this late date after

the statute of limitations under state law has run, can assert

its claim against the Executrix.

             Title 12, § 2102 of the Delaware Code is not merely a

general statute of limitations, but instead is characterized as a

"nonclaim" statute.    The purpose of the nonclaim statute is not

the same as a general statute of limitations which merely seeks

to avoid stale claims.    Rather, "prompt distribution of the

assets of the estate is the ultimate goal of the statute."

Estate of Holton, No. 4682, 1976 WL 5206, at *2 (Del. Ch. Aug.

17, 1976).    The Delaware nonclaim statute terminates an estate's

capacity to be sued eight months after the death of a decedent

unless the claim or potential claim is submitted prior thereto.

The Delaware nonclaim statute makes it impossible under state law

for a tardy claimant to obtain jurisdiction over a closed estate.

Accordingly, the executrix of the estate of Dr. Beekhuis is not

amenable to suit for late claims, including those arising under

CERCLA.
             Last, we conclude that for pragmatic reasons, Congress

could not have intended for CERCLA to preempt state nonclaim

statutes.    Preemption would be inherently unworkable.   The

district court aptly described the problem:
          Consider the following example, which
          illustrates the pitfalls of adhering to the
          logic of Soo Line and Thomopoulos: A
          decedent dies today and his estate is settled
          within eight months; twenty years from now
          the decedent is deemed a potentially
          responsible party under CERCLA, thus
          triggering the three year CERCLA limitations
          period for contribution claims; a plaintiff
          obtains a judgment against the decedent's
          estate; in order to collect the judgment,
          the money in the estate must be traced and
          retrieved subject to the applicable defenses.
          The possibility of a CERCLA claim arising
          long after the settlement of the estate would
          hang as a dark cloud over any such
          settlement, thereby compromising the goals of
          certainty and promptness in the settlement
          and distribution of decedent's estates.


Witco Corp., 822 F.Supp. at 1090.

             We do not believe that Congress intended to unsettle

estates and create the potential havoc which the district court
described.    It is merely fortuitous in this case that assets of

the estate of Dr. Beekhuis are easily traceable and retrievable.

We must consider the effect of our holding on future estates,

which may not be as financially intact as that of Dr. Beekhuis.

It is untenable that Congress intended to reach so deep into the

domain of state probate administration and use the heavy hand of

CERCLA to disturb and upset long-settled estates.     The position

urged by Witco would result in no statute of limitations being

applicable to CERCLA claims against long-closed and settled
decedents' estates -- except three years from the date of

judgment or entry of a judicially approved settlement under

CERCLA.    Such a rule would create pandemonium in the descent and

distribution of decedents' estates.    We decline to imply such an

intent on the part of Congress merely based upon a three year

statute of limitations for contribution claims under CERCLA.



                                IV.



           The Estate requests that Witco indemnify it for all

expenses, including attorney's fees, it actually and reasonably

incurred in connection with (i) the defense of Witco's claims in

this action, (ii) the defense in In re:     Estate of H. Albert

Beekhuis, No. 11,853, in the Delaware state court, and (iii) the

response to the investigative and administrative activities of

the EPA with respect to the site.     The district court correctly

recognized the strong and clear mandate of the Delaware General

Corporation Law ("DGCL") in its order requiring Witco to

indemnify the Executrix for all of the expenses requested.

            Witco is the surviving corporation in a series of

mergers that began when Halby was merged into a Witco subsidiary

in 1972.    The present suit is in effect a suit by a Delaware

corporation against one of its former officers and directors.

Witco has assumed all the liabilities of Halby through this

succession of mergers.    Del. Code Ann. tit. 8, § 259(a) (1991).

Thus, for purposes of indemnification, the rights of the Estate
must be measured as though Dr. Beekhuis had been an officer and

director of Witco.1

             Section 145(c) of DGCL requires a corporation to

indemnify any director, officer, employee or agent of the

corporation "[t]o the extent that" he was successful "on the

merits or otherwise," in defense of any threatened, pending, or

completed action, suit or proceeding in which he was a party by

reason of the fact that he is or was a director, officer,

employee or agent of the corporation.     Del. Code Ann. tit. 8, §

145(c) (1991).2    Section 145(c) is a mandatory provision that


   1     Section 145(h) of the DGCL provides in pertinent part:

        For purposes of this section, references to "the
             corporation" shall include, in addition to
             the resulting corporation, any constituent
             corporation (including any constituent of a
             constituent) absorbed in a consolidation or
             merger which, if its separate existence had
             continued, would have had power and authority
             to indemnify its directors, officers, and
             employees or agents, so that any person who
             is or was a director, officer, employee or
             agent of such constituent corporation . . .
             shall stand in the same position under this
             section to the resulting or surviving
             corporation as he would have with respect to
             such constituent corporation if its separate
             existence had continued.

Del. Code Ann. tit. 8, § 145(h)(1991).
    2
         Section 145(c) provides:

        To the extent that a director, officer, employee
             or agent of a corporation has been successful
             on the merits or otherwise in defense of any
             action, suit or proceeding referred to in
             subsections (a) and (b) of this section, or
             in defense of any claim, issue or matter
             therein, he shall be indemnified against
applies to all Delaware corporations and grants an absolute right

of indemnification in such situations.   See Green v. Westcap

Corp. of Delaware, 492 A.2d 260, 265 (Del. Super. 1985).

          The indemnification rights provided by Section 145

"continue as to a person who has ceased to be a director,

officer, employee, or agent and . . . inure to the benefit of the

heirs, executors and administrators of such a person."     Del. Code

Ann. tit. 8, § 145(j) (1991).

          The long-standing policy for the indemnification

provisions in the DGCL has been described as follows:
          The invariant policy of Delaware legislation
          on indemnification is to "promote the
          desirable end that corporate officials will
          resist what they consider" unjustified suits
          and claims, "secure in the knowledge that
          their reasonable expenses will be borne by
          the corporation they have served if they are
          vindicated." Beyond that, its larger purpose
          is "to encourage capable men to serve as
          corporate directors, secure in the knowledge
          that expenses incurred by them in upholding
          their honesty and integrity as directors will
          be borne by the corporation they serve."


Merritt-Chapman & Scott Corp. v. Wolfson, 321 A.2d 138, 141 (Del.

Super. 1974) ("Merritt-Chapman") (quoting Folk, The Delaware

General Corporation Law, 98 (1972)) (citations omitted).    Courts

          expenses (including attorneys' fees) actually
          or reasonably incurred by him in connection
          therewith.

Del. Code Ann. tit. 8, § 145(c)(1991). Subsections (a) and (b)
refer to threatened, pending or completed actions, suits and
proceedings where a person is a party "by reason of the fact that
he is or was a director, officer, employee or agent of the
corporation . . . ." Del. Code Ann. tit. 8, § 145(a),(b)(1991).
have interpreted these indemnification rights very broadly.

E.g., Heffernan v. Pacific Dunlop GNB Corp., 965 F.2d 369, 375

(7th Cir. 1992) ("Both the language and the purpose of Delaware's

indemnification statute support interpreting its scope

expansively.")

          Witco argues that the district court erred in granting

summary judgment on the Estate's indemnity counterclaim because

there are material facts in dispute concerning the alleged basis

for Dr. Beekhuis' liability.   Witco contends that Dr. Beekhuis

incurred CERCLA liability by his own personal conduct, and was

not insulated from that liability by having set up a corporate

entity and designating himself an officer and director.   The

theory of Witco's complaint is that Dr. Beekhuis is liable for

his personal acts and thus, his particular title or role within

any corporation is irrelevant to his CERCLA liability.

          We are satisfied that under federal law, Dr. Beekhuis,

as a director and officer, may be found personally liable as an

"operator" within the meaning of CERCLA.   See Sidney S. Arst Co.

v. Pipefitters Welfare Educational Fund, No. 93-1227, 1994 WL

198003 at *2 (7th Cir., May 20, 1994) (corporate officers and

directors may be held personally liable as "operators" within the

meaning of CERCLA and that this direct, personal liability is

distinct from derivative liability for corporate violations);

Riverside Mkt. Dev. Corp. v. International Bldg. Prods., Inc.,
931 F.2d 327, 330 (5th Cir. 1991) ("CERCLA prevents individuals

from hiding behind the corporate shield when, as `operators,'

they themselves actually participate in the wrongful conduct
prohibited by the Act."); United States v. Kayser-Roth Corp., 910

F.2d 24, 26-27 (1st Cir. 1990) (noting cases in which parent

corporations and shareholders were held liable as "operators"

under CERCLA); United States v. Northeastern Pharmaceutical &

Chemical Co., 810 F.2d at 743-44 (Congress intended CERCLA

liability to attach to corporate officers).    Witco alleges that

Dr. Beekhuis personally designed many of the chemical

manufacturing and disposal processes used at the site and

directed construction and maintenance of a lagoon and drainage

ditch at the site into which chemical waste was regularly

disposed.   We acknowledge that these allegations may form the

basis of Dr. Beekhuis' personal "operator" liability under

CERCLA.

            Nonetheless, the Delaware courts and legislature under

state law have chosen to provide broad statutory indemnification

protection in situations where a corporate officer or director

successfully defends against claims of personal liability that

arise from or have a nexus to his corporate position.    In

Merritt-Chapman, the claimant sought indemnification from

Merritt-Chapman for expenses incurred in successfully defending

against criminal charges of perjury and conspiracy to violate

federal securities law.    Merritt-Chapman, 321 A.2d at 140.   These

charges arose as a result of the claimant's position as a

director and officer of Merritt-Chapman.    However, the criminal

charges were not derivative; they were based on the plaintiff's

alleged personal participation in the conspiracy and on his

subsequent alleged perjured testimony.     The court nevertheless
found that the plaintiff was entitled to indemnification pursuant

to Section 145(c) to the extent that he had been successful in

defending against the criminal charges in question.    Id. at 141-

44.

          Similarly, in Green, the plaintiff sought

indemnification pursuant to Section 145(c) for the expenses that

he incurred in successfully defending against criminal charges

that arose as a result of his position as vice president of the

corporation.   Green, 492 A.2d at 262.   The criminal charges

focused on the plaintiff's personal actions and involvement in

obtaining a loan for the corporation which the corporation used

to finance a buy-out.   Id.   Yet, the court did not find that the

plaintiff was precluded from indemnification because the charges

were based on his alleged personal as opposed to derivative

liability.   See also Heffernan v. Pacific Dunlop GNB Corp., 965

F.2d 369, 372 (7th Cir. 1992) (Delaware law did not preclude

indemnification of former corporate director for legal expenses

incurred in suit alleging failure to disclose environmental

liabilities in stock purchase agreement since director may have

been sued in official capacity as well as individually in

connection with sale of stock); cf. United States v. Lowe, No.
93-2634, 1994 WL 424243 at *4, (5th Cir., Aug. 15, 1994)

("[plaintiff's] CERCLA personal liability does not, without more,

void the indemnity clause [of the corporation's bylaws] . . . .

Indeed, if [the] officers or directors were not subject to

personal liability for acts or omissions arising out of their
corporate positions, there would be little reason for the

indemnity clause.").

          In the instant case, there can be no doubt that there

is a close nexus between the lawsuits filed by Witco and Dr.

Beekhuis' former status as an officer and director of Halby.     A

remand is not necessary since it is evident that Witco's claims

against Dr. Beekhuis arise by virtue of Dr. Beekhuis' activities

as a director and officer of Halby.   Witco made no allegations of

self-dealing, criminal acts, or actions undertaken by Dr.

Beekhuis which were not performed directly on behalf of Halby.

Moreover, Witco has not alleged that Dr. Beekhuis neglected

corporate formalities such that we should "pierce the corporate

veil" and disregard the corporate entity.   We are satisfied that

indemnification is available in this matter as a matter of law

under Section 145 when the corporate agent has successfully

defended the action against him.    The order of the district court

granting summary judgment to the Estate on its claim seeking

indemnification will be affirmed.


                         V. CONCLUSION



          For the foregoing reasons, the order dated May 20,

1993, granting the motions of the Executrix and WTC for summary

judgment on the CERCLA contribution claims, and the order dated

November 24, 1993, granting the motion of the Executrix on the

counterclaim against Witco for indemnification (both of which
were made a final judgment by order entered November 29, 1993)

will be affirmed.
