BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.
To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.
To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.
CINCINNATI-A federal appellate court's decision to bar Michigan authorities from holding a Detroit bank responsible for a borrower's pollution liabilities is likely to comfort lenders nationwide about their protection under a new federal statute.
The Asset Conservation, Lender Liability and Deposit Protection Act of 1996 shields lending institutions from being held liable for borrowers' hazardous waste cleanup liabilities as long as the lending institutions were not involved in managing the borrowers' operations (BI, Oct. 7, 1996). The act applies to relevant cases that had not been adjudicated by the act's Sept. 30, 1996, effective date. The U.S. Environmental Protection Agency in 1992 issued a rule that provided lenders such protection. But, the U.S. Circuit Court of Appeals for the District of Columbia in 1994 killed that protection when it ruled the EPA does not have rulemaking authority (BI, Feb. 14, 1994).
That decision came in the same case in which a panel of the 6th U.S. Circuit Court of Appeals ruled last month. But, in its 3-0 decision, the 6th Circuit on Dec. 19 affirmed a lower court's summary judgment that Manufacturers National Bank of Detroit did not help manage a now- bankrupt borrower's operations, even though a bank official sat on the borrower's board of directors.
Michigan asked the 6th Circuit to reverse the lower court's ruling because that court did not reconsider its decision after the EPA's lender liability rule was vacated. The 6th Circuit instead ruled that the 1996 act's provisions "effectively codify" the vacated EPA rule and that the new act governed the Michigan case.
This case is important to lenders because the 6th Circuit found that the 1996 statute was "absolutely clear" and that Congress did not leave the act open to conflicting court interpretations, said attorney Joseph Lynyak, a Los Angeles-based partner with Graham & James L.L.P., which was not involved in the case.
Even without the new rule, the bank was not liable, said its attorney, Fredrick Dindoffer, a partner with Bodman, Longley & Dahling L.L.P. of Detroit. It acted "as you'd expect a responsible lender to act so its shareholders wouldn't lose money."