Foster v. U.S.

• Decision Date: 29 January 2001
• Docket Number: No. Civ.A. 95-722(TPJ).,Civ.A. 95-722(TPJ).
• Parties: P. Wesley FOSTER, Jr., Plaintiff, v. UNITED STATES of America, et al., Defendants.
• Court: U.S. District Court — District of Columbia

130 F.Supp.2d 68

P. Wesley FOSTER, Jr., Plaintiff, v. UNITED STATES of America, et al., Defendants.

No. Civ.A. 95-722(TPJ).

United States District Court, District of Columbia.

January 29, 2001.

Barbara S. Wahl, Donald B. Mitchell, Jr., Andrew C. Cooper, Arent Fox, Washington, D.C., for plaintiff.

Lisa Bell, Corey Buffo, Office of Corporation Counsel for the District of Columbia, Land Use and Public Works Section, Washington, D.C., Mary Edgar, Environmental and Natural Resources Division, Environmental Defense Section, U.S. Department of Justice, Washington, D.C., for defendant.

DECISION & ORDER

JACKSON, District Judge.

This case is presently before the Court as a continuation of an action by a purchaser of a vacant 7.98-acre tract of land is southwest Washington, D.C. (the "Property") to obtain contribution under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), § 113(f), to the cost of removing subterranean contaminants belatedly discovered to infest the Property. The contaminants are impediments to its development and have diminished its value. The sole remaining defendant, the District of Columbia (the "District"), disclaims any responsibility for the presence of the contaminants and asserts that the contaminants originated as waste products from the manufacture of munitions on the adjoining property owned by the United States, its former co-defendant, on which a federal military arsenal was situated for much of the 19th century.

I.

The controversy commenced in August 1994, with plaintiff's original complaint being assigned to District Judge Charles R. Richey. Proceedings before Judge Richey culminated in cross-motions for summary judgment upon which Judge Richey ruled in March, 1996, in a comprehensive opinion reported at 922 F.Supp. 642 (D.D.C.1996). Judge Richey granted and denied all motions in part, resolving some issues while leaving others for trial. Settlement negotiations proceeded in tandem with discovery, and trial dates were repeatedly postponed upon representations of all parties that settlement was imminent. Upon Judge Richey's death, the case was randomly reassigned to this district judge, who postponed trial twice again to afford an opportunity for mediation and to enable a reported settlement to be finalized. Plaintiff ultimately settled with the defendant United States in June 1999.

Yet another trial date was vacated in May, 2000, in favor of yet another settlement conference at which the District announced for the first time that it had no interest in settlement at any price or upon any terms. The case was then finally, called for non-jury trial on August 21, 2000.¹

Upon the following facts, as found by the Court in accordance with Fed.R.Civ.P. 52(a) following trial without a jury, and the conclusions of law drawn therefrom, for the reasons stated the Court will enter judgment for the plaintiff as hereinafter set forth.²

II.

In July, 1985, Riverside Associates ("Riverside"), a limited partnership of which plaintiff P. Wesley Foster was one partner, purchased the Property from the United States at a General Services Administration ("GSA") auction for $3.5 million.³ Riverside obtained a $3.65 million purchase money loan for the Property on June 20, 1985. Consistent with real estate lending practice at the time, this loan commitment made no mention of an environmental assessment of the Property. The GSA transferred the Property to Riverside on July 30, 1985 by a quitclaim deed. The Property was unzoned at the time of purchase, making it less valuable than a comparable piece of property that had already been zoned.⁴

In due course in 1989, Riverside obtained W1 and W2 mixed-use zoning for the Property and refinanced its loan with a second bank, Crestar Bank, for $11.2 million. Reflecting increased public awareness of the significance of hazardous wastes on real property slated for development, the new loan commitment required an environmental report. Riverside hired Environmental Strategies Corporation ("ESC") in September 1989 to perform a "Phase I" environmental evaluation of the Property. ESC's report gave no indication that the Property had been used for industrial purposes or for dumping.

In 1990, Riverside entered into a joint venture with Markborough Properties, a Canadian developer, for the purpose of developing the Property. As a precondition to its investment, however, Markborough hired another engineering firm to perform a second environmental evaluation, including analysis of several soil borings taken from the Property. In the fall of 1990, Markborough informed Riverside that its environmental studies revealed the presence of mercury, lead, and zinc contamination at depths up to 20 feet below the surface of the Property. As a result, Markborough withdrew from the joint venture. The Court finds that neither the plaintiff Foster nor the other members of Riverside were aware of any lead or mercury contamination on the Property prior to their receipt of the Markborough Properties study in late 1990.

Upon learning of the contamination, Crestar Bank called for full repayment of the $11.2 million loan. Plaintiff P. Wesley Foster was the only Riverside partner able to repay the loan personally, and as a result he became the sole general partner of Riverside in December, 1991. In 1992, Riverside obtained Planned Unit Development ("PUD") zoning for the Property, which would enable Riverside to construct a mixed use (residential and commercial) development on the Property at a higher density than the initial W1 and W2 zoning. The PUD zoning allows for a commercial and residential mix, with approximately 500 units of housing and one million square feet of commercial space as well as below-grade parking. Any subsurface development of the Property will, however, require removal of the lead and mercury contamination.⁵

Riverside has made no money on the Property. It has, in fact, expended approximately $13.2 million to date on loan interest, environmental studies, and legal costs, not to mention approximately $3.1 million in property taxes it has paid to the District of Columbia.

Plaintiff filed this lawsuit on April 14, 1995 against the District of Columbia and the United States seeking to recover his past and future response costs for addressing the environmental contamination. As noted above, plaintiff has reached a settlement agreement with the United States. Plaintiff's remaining claim against the District of Columbia, which was tried to this Court, depends upon a finding that the District "owned or operated" the Property at the time of contamination and / or "arranged for disposal" of the contamination on the Property within the meaning of CERCLA. See 42 U.S.C. § 9607(a)(2) and (a)(3).

III.

The relevant trial testimony focused on the history of the James Creek and James Creek Canal (the "Canal").⁶ The James Creek flowed southward from Capitol Hill to the Anacostia River, traversing the western portion of the Property, and formed the eastern boundary of the Washington Arsenal. In the 1870s, the James Creek was canalized. Although both the east and west sides of the Canal were walled from G St. to P St. SW, below P St. SW to the Anacostia River the Canal was contained by a masonry wall only on its western side bordering the Washington Arsenal.⁷

As James Creek in its natural state had been, the Canal was a slow-moving, tidal body, navigable during high tide by small craft. The Canal formed an integral part of the District of Columbia sewer system. Sewage flowed into the James Creek Canal from the sewage discharge pipe of the Washington City Canal. As noted above, south of P St., the eastern side of the Canal was not walled, so the Canal's eastern bank was undefined and varied with the tidal flow from 80 to as much as 300 feet wide in the portions of the Canal that flowed through the Property. Releases of sewage into the Canal, combined with the tidal flow, deposited solids on the land to the east of the Canal.

From approximately 1874 until the advent of "home rule" in the mid 20th century, the District of Columbia was governed by three commissioners, one of them being a U.S. Army Corps of Engineers officer known as the Engineer Commissioner. The District had the juridical status of a municipal corporation. Congress gave the commissioners authority over numerous municipal functions, including the power to regulate the public sewers and waste collection and disposal, as well as to make and enforce police regulations necessary to protect health and property. The Sewer Division of the District government was created in 1891, and an 1899 Act of Congress gave the D.C. commissioners control over the maintenance, repair, and dredging of the James Creek Canal.

It should be noted that at no point did the District of Columbia actually appear to own the Property. In fact, the locus of the title to the Canal and marshlands adjacent to the Canal is obscure until December, 1941, when the United States took formal ownership of the Property in fee simple by eminent domain. The United States owned the Property thereafter until it was sold to Riverside on July 30, 1985. The United States built temporary office buildings on the Property and the adjoining property to the south which were demolished in the 1970s and 1980s, when the United States classified the Property as surplus. However, the evidence shows that, even in the absence of title, the District exercised dominion and control over the use of the Canal and lands to the east of the Canal, including the Property, up to 1941.

Beginning in approximately 1904, the District operated a public dump in the vicinity of the Property, and the James Creek Canal functioned as an open sewer, leading to complaints addressed to the District Engineer Commissioner about the unsanitary conditions of the Canal. Perhaps as a result of these complaints, the District of Columbia government eventually undertook to...