United States v. Domenic Lombardi Realty, Inc.

• Decision Date: 17 October 2003
• Docket Number: C.A. No. 98-591S.
• Parties: UNITED STATES OF AMERICA Plaintiff, v. DOMENIC LOMBARDI REALTY, INC. Defendant.
• Court: Rhode Island Supreme Court

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UNITED STATES OF AMERICA Plaintiff, v. DOMENIC LOMBARDI REALTY, INC. Defendant.

C.A. No. 98-591S.

United States District Court, District of Rhode Island.

October 17, 2003.

Michael P. Iannotti, Esq. David L. Weigert, David L. Gordon, Esq., J. Tom Boer, Esq. Attorneys for Plaintiff.

Perry D. Wheeler, Richard E. Gardiner, Esq., Attorneys for Defendant.

DECISION AND ORDER

William E. Smith, United States District Judge.

In this action, the United States of America ("United States" or "Government") seeks to recover costs from Defendant Domenic Lombardi Realty, Inc. ("Lombardi Realty" or "Defendant") on behalf of the Rhode Island Department of Environmental Management ("RIDEM") and the United States Environmental Protection Agency ("EPA"). The costs for which the Government seeks reimbursement were incurred during the clean-up of environmental contamination at what now is known as the Robin Hollow Road Site in West Greenwich, Rhode Island (the "Robin Hollow Road Site" or "Site"). The action was brought pursuant to Section 107 of the Comprehensive Environmental Response, Compensation, and Liability Act, as amended ("CERCLA"), 42 U.S.C. § 9607.

This is the final chapter in the long story of the Robin Hollow Road Site. On June 7, 2002, Senior U.S. District Judge Ronald R. Lagueux issued a written decision that partially adopted a Report and Recommendation ("R&R") of United States Magistrate Judge David L. Martin. That decision held that the presence of PCB-contaminated soil on the Robin Hollow Road Site constituted a "release" as defined by 42 U.S.C. § 9607. See United States v. Domenic Lombardi Realty, Inc., 204 F. Supp. 2d 318, 329-30 (D.R.I. 2002). However, Judge Lagueux denied EPA's Motion for Summary Judgment with respect to Lombardi Realty's liability for the release. Judge Lagueux found that genuine issues of material fact existed regarding Lombardi Realty's ability to take advantage of the so-called "innocent landowner defense," contained in CERCLA's third party defense provision. See 42 U.S.C. § 9601(35)(A). After Judge Lagueux determined that a trial was required on this limited issue, this case was transferred to this writer. The sole issue at trial was whether Lombardi Realty could absolve itself of liability for the costs of the clean-up by proving it was an innocent landowner under CERCLA. This Court held a bench trial on this matter during the week of April 21 through April 25, 2003, and on May 12, 2003. The parties filed extensive post-trial submissions on June 17, 2003.

After considering all of the evidence, which remarkably (given the narrow issue) includes 403 factual stipulations, six days of live witness testimony, and hundreds of exhibits, as well as the parties' written arguments, this Court finds that Lombardi Realty has failed to prove that it was an innocent landowner. Lombardi Realty is therefore liable for the response costs incurred by the EPA and RIDEM in connection with the clean-up of the Robin Hollow Road Site. Accordingly, as set forth below, judgment shall enter for Plaintiff, and against Defendant.

I. Findings of Fact

A. Armand Allen's Ownership of the Land, and Its Sale to Domenic Lombardi Realty, Inc.

During the early to mid-1980s Armand Allen ("Allen") owned thirty-one acres of property located off of Robin Hollow Road in West Greenwich, Rhode Island. During his period of ownership, Allen began construction of a home on the property, but never completed the structure. Allen, along with his wife, Haroldean Allen, lived in a sixty foot trailer on the Site. Although he never obtained the licenses required to operate a junkyard, Allen stored a number of junk cars and trucks on his property in various states of disrepair during his ownership of the land. The Town of West Greenwich denied Allen's multiple applications for a junkyard license, but never ordered him to clean up his property.

In the fall of 1986, Domenic J. Lombardi ("Lombardi"), an employee of Lombardi Realty¹ approached Allen regarding a "For Sale" sign that was posted at the Site. Allen indicated that his price for the property was $135,000, but that he was willing to drop the price to $85,000 in order to make a quick sale. Lombardi testified that while he was on the property, he noticed stripped-down cars and trucks, as well as other solid waste. Lombardi directed his real estate agent, Ray Walsh, to make an offer on the property of $85,000, which Allen immediately accepted on December 11, 1986. Lombardi testified that he believed Allen was willing to accept such a low bid on the property for two reasons: (1) Allen was being investigated by state and local police for operating a junkyard without a license; and (2) Allen had an ongoing matter in Florida that required his immediate attention.

Lombardi testified that Allen informed him that at one time he stripped electrical transformers on the Site in order to retrieve their copper. To support this contention, Lombardi Realty presented Herbert Plympton ("Plympton"), a truck driver who claimed to have delivered a truck-load of transformers to Allen at the Site sometime between 1982 and 1985. Plympton's testimony, however, did little to lend support to Lombardi's claim. First, Plympton's credibility is highly questionable. He was convicted and sentenced to 41 months in federal prison for receiving, storing, concealing, and disposing of stolen goods. Moreover, the First Circuit Court of Appeals found that a two-level increase in his sentence for those offenses was proper because he had lied to the District Court. See United States v. Black, 78 F.3d 1, 3-4 (1^st Cir. 1996). Second, despite numerous witnesses who testified regarding the pungent odor of PCBs², Plympton testified that he smelled "nothing" when he observed Allen removing the transformers from his truck. As will be described infra, the PCBs contained in transformers have an unmistakable, pungent odor that Plympton almost certainly would have sensed had he in fact delivered the transformers. Third, Plympton was not revealed to the Government or this Court as a witness until the first day of trial.³

Lombardi's testimony regarding Allen's statements about the presence of transformers is also not credible and lacks corroboration. Like Plympton, Lombardi is a convicted felon.⁴ Moreover, the only testimony that Lombardi Realty offered to prove that electrical transformers may have been disposed of on the property by Mr. Allen was that of Plympton and Lombardi, two men whose extensive criminal activities and history of lying in court makes their testimony (without corroboration) effectively worthless.

To contradict Lombardi and Plympton's testimony, the Government presented testimony of Haroldean Allen by way of excerpted portions of her video deposition. Ms. Allen testified that she never saw her husband bring transformers onto the property. While Ms. Allen's testimony is somewhat unclear on this point, her testimony is more credible than that of Lombardi and Plympton. While the Court believes that Allen did, in fact operate some kind of scrap yard for old cars and car parts on the property, the Court finds no credible evidence to support the Defendant's contention that prior owners of the Site deposited PCBs on it.

Lombardi employed the assistance of Ray Walsh, a real estate agent, during the purchase of Allen's property on Robin Hollow Road. At trial, Walsh testified that, in preparation for the purchase of the property, he obtained a plat map of the property from the West Greenwich City Hall in order to approximate the future assessment of taxes that Lombardi would incur by owning the property. Walsh further testified that he did not perform any additional background investigation, such as an environmental assessment or a walk around the property, nor did he contact the local authorities regarding information on the use of the property. Walsh testified that it was not customary in 1986 to perform environmental assessments when purchasing residential property.

The Government, on the other hand, offered the expert testimony of Peter Scotti, a broker and appraiser of Rhode Island real estate for approximately thirty years. Mr. Scotti testified that, even in 1986, at least a Phase II environmental assessment⁵ of the property should have been conducted, especially if Lombardi knew that Allen had disposed of waste on the property.⁶ This Court credits Scotti's testimony and finds that the applicable industry standard, even in 1986, would dictate that at least a minimal environmental assessment should have been conducted by Lombardi prior to his purchase of the Site.

B. Lombardi Realty's Ownership of the Property — The Discovery of PCBs

After purchasing the Allen property, Lombardi completed work on the partially-constructed, single-family home that Allen had left unfinished. Despite the presence of the house and trailer, the vast majority of the thirty-one acres of land remained open space with some wooded areas.

In 1987, Brian Prest ("Prest"), who lived near the Site, frequently rode his dirt bike on the property. He testified that he witnessed trucks dumping trash, including electrical transformers, on the Lombardi Realty property. He also stated that he frequently smelled unusual odors when on the land, and that prior to Lombardi's purchase of the land, it was "pretty clean." Tr. Tr. III 182:6.

In March of 1987, Lombardi began renting out the mobile home located on the Site. Margarita Broadhurst ("Broadhurst"), the new tenant, testified that she saw transformers amongst solid waste debris on the Site within a few months after moving into the mobile home.⁷ Additionally, Pauline Lambert ("Lambert"), a friend of Broadhurst, testified that on one occasion she saw a Lombardi Realty truck on the Site that appeared to be carrying In November 1987, the State of Rhode Island, transformers. apparently unaware of Prest's, Broadhurst's, and Lambert's observations, became concerned over Lombardi's...