Northeast Ct. Economic Alliance, Inc. v. ATC Partnership

• Court: Supreme Court of Connecticut
• Citation: 776 A.2d 1068,256 Conn. 813
• Decision Date: 24 July 2001
• Parties: NORTHEAST CT. ECONOMIC ALLIANCE, INC., ET AL. v. ATC PARTNERSHIP ET AL.

256 Conn. 813
776 A.2d 1068

NORTHEAST CT. ECONOMIC ALLIANCE, INC., ET AL.
v.
ATC PARTNERSHIP ET AL

(SC 16245), (SC 16246)

Supreme Court of Connecticut.

Argued November 2, 2000.

Officially released July 24, 2001.

McDonald, C. J., and Borden, Katz, Palmer and Flynn, Js.¹

256 Conn. 814

Richard S. Cody, with whom were Ana C. Navarro and Lisa Silvestri, for the appellant-appellee in each case (plaintiffs)

Richard P. Weinstein, with whom was Nathan A. Schatz, for the appellee-appellant in both cases (named defendant).

Edward P. McCreery III, Charles K. Campbell and Matthew P. Lundy filed a brief for the Stamford Urban Redevelopment Corporation et al. as amici curiae.

256 Conn. 815

Opinion

BORDEN, J.

The principal issue in these consolidated appeals and this cross appeal is whether, in the underlying condemnation proceeding, the trial court improperly excluded, as a matter of law, evidence and testimony regarding the environmental contamination and remediation costs associated with the condemned property. The plaintiffs, the Northeast Ct. Economic Alliance, Inc. (Northeast), and the town of Windham (town),² appeal³ from the judgment of the trial court, which reassessed the award of damages for the taking by eminent domain of the real property of the named defendant, ATC Partnership.⁴ In their appeal, the plaintiffs claim that the trial court, in its valuation of the taken property, improperly excluded, as a matter of law, evidence of environmental contamination and remediation costs.⁵ In its cross appeal, the defendant

256 Conn. 816

claims that the trial court improperly denied its request for an evidentiary hearing regarding the appropriate rate of interest to be allowed on the amount of compensation awarded, granting instead interest only at the default statutory rate pursuant to General Statutes § 37-3c.⁶ We conclude that evidence of environmental contamination

256 Conn. 817

and remediation costs may not be excluded, as a matter of law, from a condemnation proceeding. Accordingly, we reverse the judgment of the trial court

The trial court found the following facts. The defendant was the owner of a parcel of real property in the town, occupying approximately forty acres. The parcel previously was owned by the American Thread Company (American Thread), which used the complex until 1985 as a textile mill in the manufacture of thread, yarn and string products. In 1985, American Thread ceased its manufacturing operations and sold the parcel to Eastern Connecticut Industrial Park Associates (Eastern). Prior to that conveyance, a release of hazardous waste had occurred at the complex, and the transferor, American Thread, filed a so-called "Form III" pursuant to the Connecticut Transfer Act; General Statutes §§ 22a-134 through 22a-134d; in which it certified that it would remediate the hazardous waste discharge as required by, and subject to the approval of, the department of environmental protection. In 1987, Eastern sold the parcel to the defendant for $2.7 million. During the time that the defendant owned the complex, no manufacturing activity took place there.

For several years prior to the taking in 1994, the plaintiffs and the defendant had been actively involved in a nonadversarial effort to obtain governmental funding for the rehabilitation and redevelopment of the property pursuant to the Economic Development and Manufacturing Assistance Act of 1990; General Statutes

256 Conn. 818

§§ 32-220 through 32-234. In December, 1993, this effort culminated in the publication and submission to the department of economic and community development of a lengthy, comprehensive economic development plan entitled "Windham Mills and Windham State Heritage Park Master Action Plan." Prior to the taking in 1994, the plaintiffs possessed detailed information about the environmental condition of the complex based upon the assessments made by two environmental consulting firms in October, 1993, and June, 1994, whose reports were a matter of public record, and were available to all of the parties involved well before the negotiations between them for the voluntary acquisition of the property had broken down

The trial court found the following additional facts that relate specifically to the condition of the complex at the time of the condemnation by Northeast in 1994. The trial court found that the condition of the buildings on the complex "ranged in general from poor to good [and that the] extent of damages caused by leaks was [in some instances] quite extensive, involving multiple structural components over large areas...." (Internal quotation marks omitted.) In addition, one of the buildings, commonly referred to as Mill 4, showed "advanced signs of deterioration, including collapsing walls, leaking roofs, buckling floors and vegetation and trees in the interior of the building protruding through the roof...." (Internal quotation marks omitted.) In its determination of just compensation, and consistent with its ruling on the defendant's motion in limine, however, the trial court did not take into account evidence of the environmental contamination and remediation costs related to the property.

In August, 1994, Northeast, acting on behalf of the town,⁷ filed a statement of compensation in the amount

256 Conn. 819

of $1 in connection with the taking of the complex. In September, 1994, Northeast filed a return of notice and deposited $1 with the clerk of the Superior Court pursuant to General Statutes § 8-130.⁸ Thereafter, the defendant applied, pursuant to General Statutes (Rev. to 1993) § 8-132,⁹ for review of the statement of compensation.

256 Conn. 820

After the taking, the town, as the transferee, executed a Form III certification, which stated that the defendant, as the transferor, was "`unable to submit a negative declaration [because the] property was taken by eminent domain, involuntarily.'" In November, 1994, the town transferred the property by quitclaim deed to Windham Mills Development Corporation (Windham Mills), a private nongovernmental corporation. The Form III certification by Windham Mills stated that a negative declaration could not be provided by the town because it had "`acquired the property by eminent domain as part of [a] regional redevelopment plan supported by the State of Connecticut [and that a] site investigation is currently being performed.'" After it acquired the property, Windham Mills demolished several

256 Conn. 821

of the buildings in the complex, and thereafter engaged in the management of various substances, including asbestos, lead and polychlorinated biphenyls (PCBs), as well as petroleum contamination, which had been identified and reported by the environmental consulting firms that had been retained by the plaintiffs.

It is undisputed that there was environmental contamination on the property on the date of the taking. Prior to the commencement of trial, however, the defendant filed a motion in limine to preclude the introduction of evidence and testimony regarding environmental contamination or remediation costs related to the complex. The town subsequently made an evidentiary offer of proof, which Northeast adopted, with respect to the evidence that the plaintiffs intended to offer regarding the condition of the property at the time of the taking. The offer stated that the plaintiffs would put on evidence of "[t]he presence of asbestos containing material (ACM) and the conditions of these materials. This offer [would] include evidence that: (1) there were approximately 35,000 linear feet of ACM mostly in the form of pipe and duct insulation used in the construction of the buildings and other improvements, the condition of which was in extremely bad shape, eroding and decomposing, and had dropped and was dropping into ... piles on the floors, throughout the interior of the buildings, especially basements; (2) the ACM was friable, airborne and in a state whereby it would become airborne by disturbances including walking and air movement; (3) the ACM had to be abated, contained or removed according to applicable health and other codes before the buildings (i) could be used or occupied; (ii) could be rehabilitated; (iii) could be demolished; and (4) the abating, containing, removing and disposing of the ACM represents costs in rehabilitating the structures, and the estimates of the said abatement, were it

256 Conn. 822

done according to the applicable codes, known at the time of the taking."

The offer also stated that the plaintiffs would introduce evidence of the "[p]resence of lead-containing materials, like lead paint, and the conditions of those materials." The offer would "include evidence that: (1) throughout the buildings there were tens of thousands of square feet of wall, ceiling and floor space that had lead-based and/or lead-containing paint that crumbled, peeled and otherwise deteriorate[d], in many places having dropped into piles of dust and peelings on the floors and along the walls; (2) these materials had decomposed, in open, accessible areas, and in a state whereby they would become airborne by disturbances including walking and air movement; (3) these materials had to be abated, contained, removed or disposed according to applicable health and other codes before the buildings (i) could be used or occupied; (ii) could be rehabilitated; (iii) could be demolished; and (4) the abating, containing, removing and disposing of these materials represents costs in rehabilitating the structures, and the estimates of the said abatement, were it done according to the applicable codes, known at the time of the taking."

The offer of proof further stated that the plaintiffs would introduce evidence of "[s]oil [c]ontamination by PCBs and by petroleum substances. This offer will include evidence that: (1) PCBs were both in equipment at the facility and in the soils in different areas of the property as the consequence of leaking transformers, that required special...