[00:00:00] Speaker 01:
The next argument this morning is 181785, Waverly View, investors versus United States.

[00:01:00] Speaker 00:
Good morning.

[00:01:01] Speaker 00:
May it please the court.

[00:01:03] Speaker 00:
My name is Kevin Bain, and I represent Waverly View Investors.

[00:01:07] Speaker 00:
The court below here found that the government had engaged in a permanent physical taking of Waverly's property, and the government does not challenge that determination on appeal.

[00:01:16] Speaker 01:
But that's a very limited finding, right?

[00:01:19] Speaker 01:
That's only with respect to when the compensation was $56,000 and it's the use of these monitoring wells on a particular slice of the property, correct?

[00:01:29] Speaker 00:
Yes, Your Honor.

[00:01:31] Speaker 00:
Now, the Waverly groundwater is now part of a designated Superfund site because of contamination caused by the government.

[00:01:38] Speaker 01:
That happened before all this happened, right?

[00:01:40] Speaker 01:
That's correct.

[00:01:41] Speaker 00:
What year was that?

[00:01:43] Speaker 00:
No, it is designated as a Superfund site after, it was designated as part of the Superfund site after the government entered the property, drilled the wells and discovered the contamination.

[00:01:56] Speaker 00:
The question, the central question in this case... This will be clear, that's not in front of us.

[00:02:00] Speaker 04:
You could have a separate takings claim related to that, but those actions took place after the actions at issue in this case, correct?

[00:02:07] Speaker 00:
The physical taking in this case consists of the government's entry onto the property, drilling wells and building a road across the middle of the property.

[00:02:15] Speaker 00:
The question, the central question in the case, whether that physical taking

[00:02:21] Speaker 00:
and the government's subsequent failure to discharge its statutory obligation to remediate the property as expeditiously as practicable has destroyed or substantially impaired the development value of the property.

[00:02:35] Speaker 00:
Now, in the court's opinion, the court seemed to think there are only two ways to look at this question.

[00:02:40] Speaker 00:
Either the government had told Waverly it may not develop, or Waverly made a calculated business decision not to proceed.

[00:02:50] Speaker 00:
What the court recognized throughout the trial, however... To proceed on what?

[00:02:54] Speaker 01:
I guess I'm a little unclear.

[00:02:56] Speaker 01:
That they had made a calculated decision not to proceed in development of the property?

[00:03:01] Speaker 00:
The court said in its opinion that Waverly had made a calculated business decision not to proceed with development.

[00:03:09] Speaker 00:
Okay.

[00:03:09] Speaker 00:
And what I would like to suggest to your honors is that there's a third way to look at this evidence, and it's the way the court looked at it throughout the trial.

[00:03:16] Speaker 00:
That as a practical matter,

[00:03:18] Speaker 00:
Waverly was prevented from proceeding.

[00:03:20] Speaker 00:
Here's what the government said during trial.

[00:03:23] Speaker 01:
They, Waverly- Can I ask you, what is your position, back to Judge Moore's point, is a practical matter Waverly didn't do it because of what?

[00:03:33] Speaker 01:
Because of this construction that had been done when government entered the property?

[00:03:38] Speaker 00:
Because the government constructed wells, built a road.

[00:03:42] Speaker 00:
and put a scarlet letter on this property saying it's contaminated.

[00:03:46] Speaker 00:
And the result of that was to totally freeze development.

[00:03:50] Speaker 00:
And the court recognized that throughout the trial.

[00:03:51] Speaker 01:
So you're using contamination as a basis?

[00:03:55] Speaker 01:
Or you're just saying because the government announced the property was contaminated?

[00:03:59] Speaker 01:
Because as Judge Moore, I think, alluded to earlier,

[00:04:02] Speaker 01:
This claim isn't about the government's liability for contamination of property.

[00:04:06] Speaker 00:
That's correct.

[00:04:09] Speaker 01:
But you just mentioned the scarlet letter it put on is a basis, therefore, for claiming that you're deserving these damages?

[00:04:18] Speaker 00:
Well, there was a physical taking.

[00:04:21] Speaker 00:
And that puts this case in a particular category.

[00:04:24] Speaker 00:
Now the question is, what was the damage caused by the physical taking?

[00:04:28] Speaker 00:
And what the evidence showed, and what the court said throughout the trial,

[00:04:32] Speaker 00:
was that as a practical matter, once the government came on, drilled the wells, built the road, and made this part of a Superfund site, at that point, development was frozen.

[00:04:42] Speaker 00:
As a practical matter, the court said, they really can't develop or go forward as a practical matter.

[00:04:49] Speaker 00:
I mean, surely the government and the army must understand that.

[00:04:53] Speaker 00:
And then the court said during the trial, the EPA needs to get on that property and figure out what to do.

[00:04:58] Speaker 00:
No question about that.

[00:05:00] Speaker 04:
And when the Army's private... Yeah, but I say lots of things during oral argument.

[00:05:04] Speaker 01:
Lots of things.

[00:05:05] Speaker 01:
Yeah, this is all the trial... Are you referring to anything in her opinion?

[00:05:08] Speaker 01:
Can you cite to any of that stuff during the opinion?

[00:05:12] Speaker 00:
No, and this is the problem.

[00:05:13] Speaker 00:
What I would like to suggest to the Court is that at the close of all of the evidence at the trial, the Court once again turned to the Deputy Assistant Secretary of the Army and said, the problem here

[00:05:25] Speaker 00:
is that waverly my client has got a piece of property and they can't do anything much with it until this is figured out.

[00:05:32] Speaker 00:
Now, in the court's opinion, as I said, the court seemed to view this as an either-or proposition.

[00:05:38] Speaker 01:
I'm really unclear.

[00:05:39] Speaker 01:
Are you, to the extent that you were relying on statements made by the trial judge during the proceedings as a basis for our concluding that there was an entitlement to a greater amount of damages.

[00:05:53] Speaker 00:
Not as such.

[00:05:53] Speaker 00:
What I am suggesting is that the evidence clearly demonstrates something that the court, in its ultimate opinion, didn't really focus on.

[00:06:03] Speaker 00:
The court, in its ultimate opinion, said that Waverly made a conscious, calculated business decision not to proceed with development as if it had the option of proceeding, but it chose not to.

[00:06:14] Speaker 00:
And what the evidence shows is that proceeding with development was completely impractical for a number of reasons.

[00:06:20] Speaker 00:
The most obvious reason is that

[00:06:22] Speaker 00:
Waverly is in the business of developing raw property into finished lots for sale to home builders.

[00:06:29] Speaker 00:
When the EPA came along, three developers, three home builders, were interested in purchasing this property at full market value.

[00:06:38] Speaker 00:
As soon as the EPA said, we must come out of the property, those buyers disappeared.

[00:06:44] Speaker 00:
And what the court said in its opinion is that Waverly made a calculated business decision not to proceed

[00:06:51] Speaker 00:
Even though it could have if you think about it that makes no sense.

[00:06:55] Speaker 00:
Why in the world would a developer?

[00:06:57] Speaker 00:
choose to sit on property instead of proceeding to develop it if it was practical to do so.

[00:07:03] Speaker 01:
So are you saying that the building, this narrow strip that the government built, precluded your property, or you're saying, as you said a few minutes ago, that by coming on the property, they painted a scarlet letter there so that the cause for not being able to develop the property was the wells in and of themselves, or was the scarlet letter?

[00:07:24] Speaker 00:
It's a combination, but the physical presence of the wells and the road and the continued occupation and the need to continue occupying the property for decades prevented development.

[00:07:35] Speaker 00:
What the government has said throughout this case is interesting.

[00:07:41] Speaker 00:
Back when the right of entry expired in 2014, the government EPA wrote to Waverly and said, much remains to be done on this property.

[00:07:50] Speaker 00:
That work is essential and we cannot give you an estimate of how long it will take.

[00:07:55] Speaker 00:
And then when the right of entry expired, the government testified at trial, they put everything on hold because Waverly had brought a lawsuit.

[00:08:04] Speaker 00:
And now it tells this court, six years after entering the property, that it is unknown whether the government's actions can be made compatible with development of the property.

[00:08:14] Speaker 00:
if it's unknown whether the government's continued physical occupation of the property.

[00:08:19] Speaker 02:
But it was known that that property had been contaminated for decades.

[00:08:25] Speaker 02:
So that the entire debate is on the premises.

[00:08:30] Speaker 02:
This was the chemical warfare plant, the adjacent properties.

[00:08:34] Speaker 02:
And with all the statutes of limitations passed, no liability of the government for contamination.

[00:08:42] Speaker 02:
So I'm trying to understand just where

[00:08:45] Speaker 02:
what the compensation is measured by.

[00:08:48] Speaker 00:
The compensation is measured by the difference between the value of the property before the government came along.

[00:08:55] Speaker 00:
And there's ample testimony in the record that, from all the appraisers who have looked at this property, that that value is between $12 million and $14 million.

[00:09:02] Speaker 01:
And the fact is... That would be based on a finding that the building of these, whatever we're calling them, caused

[00:09:12] Speaker 01:
the value to have without them to be one thing and to be millions of dollars greater with them.

[00:09:21] Speaker 01:
Yeah, less with them.

[00:09:23] Speaker 00:
This is why I'm focusing on the most critical evidence in this case.

[00:09:27] Speaker 00:
That before the EPA insisted on entering the property, three national home builders wanted to buy the property at full market value.

[00:09:35] Speaker 00:
They weren't discounting it because of the fact that there was contamination on Fort Detrick.

[00:09:40] Speaker 00:
or that there were speculation that it might have seeped into the groundwater on Waverly for a very good reason.

[00:09:46] Speaker 00:
Groundwater contamination hundreds of feet below the surface has nothing to do with the developer's ability to develop the property and to build homes that aren't going to use well water, that are going to use town water.

[00:10:00] Speaker 00:
The possible existence of groundwater contamination hundreds of feet below the surface was no deterrent

[00:10:07] Speaker 00:
to three major national home builders.

[00:10:10] Speaker 00:
The deterrent to them was that if they committed to buy these lots when they were developed, they faced a problem.

[00:10:17] Speaker 00:
The EPA was going to be occupying that property

[00:10:20] Speaker 00:
was going to be continuing to investigate, to remediate, and monitor that property for decades.

[00:10:27] Speaker 00:
What home builder in his right mind would commit to buy those lots under those circumstances?

[00:10:33] Speaker 00:
And if there's no possible home builder who would have any interest anymore, given the EPA's occupation of this property for decades, why in the world would it make any sense for Waverly to try to

[00:10:45] Speaker 00:
revise its preliminary plans to accommodate wells when it doesn't even know what additional wells the government might want to drill in the future.

[00:10:52] Speaker 02:
Is it correct that some of the property was developed the portion more remote from the fort?

[00:10:59] Speaker 00:
I beg your pardon?

[00:11:00] Speaker 02:
I say, is it correct that some of the property, what was in fact developed?

[00:11:06] Speaker 00:
Phase one, which is more remote from the property, had an apartment parcel on it.

[00:11:11] Speaker 00:
And at one point, Waverly was so desperate to try to get something moving on this property that it reached a deal with Nussbaum Builders to build an apartment building, a deal which the testimony showed was the most arduous contract that Waverly had ever entered into.

[00:11:28] Speaker 00:
They had to build $4 million worth of infrastructure to commit, in order to get this apartment builder to buy the property for $5 million,

[00:11:39] Speaker 00:
couple years down the road, it was a terrible deal, but at least they could get something on one sliver of the property remote from Fort Detrick.

[00:11:50] Speaker 00:
But there was one home builder that wanted to buy all the phase one and phase two.

[00:11:55] Speaker 00:
And this is a very important point because the government relied upon a sliver of testimony from Mr. Anderson, the development manager for Waverly, to support

[00:12:05] Speaker 00:
the court's finding that Waverly made a calculated business decision not to proceed.

[00:12:11] Speaker 00:
And if I may, I'd like to explain what happened there.

[00:12:15] Speaker 00:
Waverly had a letter of intent from Stanley Homes to buy phase one and phase two.

[00:12:23] Speaker 00:
And then the EPA comes along and Mr. Anderson, as a responsible businessman, says,

[00:12:27] Speaker 00:
I can't in good conscience sign a contract with Stanley Homes without telling them the EPA is about to come on to the property and I cannot in good faith commit to deliver this property when the EPA is going to be there.

[00:12:41] Speaker 00:
So he discloses the EPA's letter

[00:12:44] Speaker 00:
and makes a decision, he had to do that.

[00:12:47] Speaker 00:
The court cites that testimony that it was my decision to disclose the EPA's interest and to say I couldn't unconscious commit to deliver this that led the court to say, aha, conscious calculated business decision not to proceed.

[00:13:01] Speaker 00:
But what happened then is Waverly said to Stanley Holmes, why don't you commit to buy it contingent upon the EPA's rapidly finishing its work?

[00:13:12] Speaker 00:
Stanley Holmes said, no.

[00:13:14] Speaker 00:
and they walked away.

[00:13:16] Speaker 00:
And at the same time, Waverly is trying to interest two other builders.

[00:13:20] Speaker 00:
In phase one, the more remote part of the property, and they won't even pursue a deal on phase one because of the EPA's occupation of the property next door.

[00:13:32] Speaker 00:
Now, when the government admits that it is unknown today whether its physical occupation of the property

[00:13:42] Speaker 00:
and its future remediation activities, whether that is even compatible with development, that's a concession that we're right.

[00:13:52] Speaker 00:
The government has said they don't know today whether their future activity is going to be compatible at all with development of this property.

[00:14:02] Speaker 00:
Once the government has physically occupied and prominently taken the property,

[00:14:06] Speaker 00:
And once it is clear that it is unknown whether development is compatible at all with the government's activity, that is an acknowledgment that Waverly cannot proceed and ought to be entitled to the difference between the value of this property before the government entered and the value today.

[00:14:26] Speaker 04:
What about Mr. Hale?

[00:14:29] Speaker 04:
It's my understanding that there was at least one developer that approached Waverly in 2012 after all of this.

[00:14:36] Speaker 04:
and was interested in developing the property, and he had a lot of experience with contaminated sites, and that Waverly just chose not to pursue it.

[00:14:44] Speaker 00:
That's incorrect, Your Honor.

[00:14:45] Speaker 00:
And we addressed that at pages 21 and 22 of our reply brief.

[00:14:49] Speaker 00:
There was a follow-up.

[00:14:52] Speaker 00:
The evidence is laid out in pages 20 and 21 of our brief.

[00:14:56] Speaker 04:
But what was the follow-up?

[00:14:58] Speaker 04:
I mean, how did the people follow up?

[00:14:59] Speaker 00:
The follow-up was that Waverly's.

[00:15:00] Speaker 00:
Wait, stop, please.

[00:15:01] Speaker 00:
I'm sorry.

[00:15:01] Speaker 04:
You said that three people wanted to buy the property beforehand and that no one would touch it afterwards.

[00:15:08] Speaker 04:
But there was evidence in this record that a Mr. Hale afterwards approached and was interested in developing the property.

[00:15:14] Speaker 04:
So I feel like your representation to the court isn't at least completely consistent with what I understand the facts to be.

[00:15:20] Speaker 04:
So what was the situation with Mr. Hale?

[00:15:22] Speaker 00:
Well, it was a very preliminary statement by a developer that has had experience taking distressed property and trying to do something with it.

[00:15:31] Speaker 00:
And so Waverly's broker contacted Hale's broker and said, if there's any interest, please contact us.

[00:15:37] Speaker 00:
And they didn't contact any further.

[00:15:39] Speaker 02:
So the damages that you're requesting are the value between uncontaminated property and the present value or the value at the time that this developer entered the contaminated property?

[00:15:57] Speaker 00:
We're looking for the value of the property as of November 2013 when the government entered the property.

[00:16:05] Speaker 02:
But it was already contaminated?

[00:16:07] Speaker 00:
Well, the contamination is an interesting question.

[00:16:11] Speaker 00:
You can have a theological debate about whether contamination or whether the entrance onto the property and the discovery of the contamination caused the problem, but the reality is that the possibility of contamination hundreds of feet below the surface in a development that was not going to use groundwater

[00:16:28] Speaker 00:
was not affecting the value of the property because knowing that possibility, three developers, three home builders were interested in purchasing the property at full value until they realized the EPA was going to be doing work on the property.

[00:16:41] Speaker 00:
And at that point, as I said, what home builder in his right mind would purchase that property?

[00:16:47] Speaker 00:
And that's the problem.

[00:16:48] Speaker 00:
Waverly's frozen.

[00:16:49] Speaker 04:
You're suggesting that the value of the property was unaffected by the known contamination

[00:16:55] Speaker 04:
nearby and potentially in the groundwater below this property.

[00:16:59] Speaker 04:
But Waverly was able to pluck this property out of bankruptcy for a minuscule amount of money post contamination.

[00:17:06] Speaker 04:
So you're acting as though this property was worth $37 million.

[00:17:10] Speaker 04:
But what did Waverly purchase this property for?

[00:17:14] Speaker 00:
Waverly and its predecessor.

[00:17:17] Speaker 04:
What did Waverly purchase this property from in bankruptcy?

[00:17:21] Speaker 00:
The purchase price assigned in banks was $4 million.

[00:17:24] Speaker 00:
$4 million.

[00:17:25] Speaker 04:
So wait, so they purchased a property for $4 million post contamination, post knowledge of contamination in all the nearby communities, post kids coming down with cancer in the nearby community, and they bought it for $4 million, but you're standing here in front of us telling us it was worth $37 million and that that's what the government should pay for it.

[00:17:44] Speaker 00:
Waverly has 13 million dollars invested in this property, Your Honor, and is carrying the property at a carrying cost of over half a million dollars a year.

[00:17:51] Speaker 04:
No, Waverly doesn't.

[00:17:53] Speaker 04:
Its predecessor had 13 million dollars invested in it.

[00:17:57] Speaker 04:
Waverly bought it for 4 million.

[00:17:58] Speaker 04:
They didn't invest 13 million in it after they bought it for 4 million.

[00:18:01] Speaker 04:
That's incorrect.

[00:18:04] Speaker 00:
Christopher Dorman is the managing member and the majority owner of this, of the entities owning this property going back to

[00:18:12] Speaker 04:
The fact that he owned the predecessor company that went bankrupt doesn't mean that this property, at the time he purchased it for $4 million, that Waverly went on and paid another $13 million.

[00:18:24] Speaker 04:
Waverly's got $4 million of skin in the game and not a penny more.

[00:18:27] Speaker 04:
Anyone could have purchased that property in bankruptcy for $4 million.

[00:18:30] Speaker 00:
At the time of the Waverly acquisition of the property, it was appraised at $12.8 million.

[00:18:38] Speaker 00:
And whether or not you think Waverly got a good deal has nothing to do with this case.

[00:18:42] Speaker 00:
You know what?

[00:18:42] Speaker 04:
My kids have gone through my husband's baseball cards recently, and they are convinced this collection is worth a fortune.

[00:18:48] Speaker 04:
We all know it's only worth what somebody's willing to pay for it.

[00:18:52] Speaker 00:
Your Honor, the reality is the bankruptcy proceeding has nothing to do with the fair market value of the property and every appraiser who looked at this property agrees that the four million dollars assigned in a bankruptcy proceeding has nothing to do with fair market value.

[00:19:06] Speaker 00:
Multiple appraisers, every appraiser that's looked at this has said the value of the property was about 12 to 14 million dollars before the government came along and the government came along

[00:19:17] Speaker 04:
After wavering how can you stand in court and in your briefs and argue to us that there's 37 million dollars of damage that your plaintiffs are entitled to I beg your pardon How can you if you're now saying the value of the property was 12 million?

[00:19:29] Speaker 04:
How can you argue at some places in this case for 37 million dollars?

[00:19:34] Speaker 00:
No your honor.

[00:19:35] Speaker 00:
We're looking for nine million dollars the difference between 13 million dollars

[00:19:40] Speaker 00:
uh... and uh... you reference the thirty seven million that's what you sued them for in this court right there was a thirty seven million there might have been an endowment clause in some tort case that i was not involved in but in this case the evidence before the court of claims was that the difference in value between the time uh... right before the government took it and right afters was uh... nine million dollars okay we're well into our report we'll restore some time while we hear from the government

[00:20:17] Speaker 03:
Good morning.

[00:20:18] Speaker 03:
My name is Erica Kranz for the United States.

[00:20:22] Speaker 03:
Waverly had the full opportunity to present evidence of its view of this taking, and the Court of Federal Claims rejected the view.

[00:20:29] Speaker 01:
So their theory seems to be, at least as I understand your friend here, is that what caused the property to not be saleable was the government's action of coming in.

[00:20:44] Speaker 01:
as opposed to, one could argue, the fact that this was near a circular site, a superfund site, and that raises certain questions.

[00:20:53] Speaker 01:
So what's your response to that?

[00:20:55] Speaker 03:
Well, first, something that we've already been talking about a little bit this morning.

[00:21:00] Speaker 03:
I think if you're going to look at one document in this record, I want it to be at Appendix 4102, which is the public presentation from 1997 projecting that this plume extended onto Waverly's land.

[00:21:13] Speaker 03:
The idea that a buyer at that time, or in intervening years between 1997 and when Waverly bought the property in 2012, or at any time past then, would have expected that there would never be any government activities on this property to investigate and possibly remediate this contamination, that's just not reasonable.

[00:21:35] Speaker 04:
Well, but wait.

[00:21:35] Speaker 04:
They introduced evidence that in 2013, three different developers were interested in the property.

[00:21:41] Speaker 03:
That's right.

[00:21:42] Speaker 03:
And the Court of Federal Claims.

[00:21:45] Speaker 03:
Didn't discuss that evidence.

[00:21:46] Speaker 04:
No, she did discuss that.

[00:21:48] Speaker 03:
And her view was.

[00:21:49] Speaker 04:
In her opinion, it's discussed?

[00:21:51] Speaker 03:
I believe so.

[00:21:52] Speaker 03:
OK, you can point me to where.

[00:21:53] Speaker 03:
That'd be great.

[00:21:55] Speaker 03:
Sorry, I don't have that site right in front of me, but her interpretation of that evidence is that Waverly failed to connect the dots between these buyers having some interest, deals not being consummated, and

[00:22:13] Speaker 03:
the complained of activity here, which is not the contamination on this site.

[00:22:19] Speaker 03:
It's not the contamination at the site next door on the government property.

[00:22:23] Speaker 03:
It's the wells.

[00:22:25] Speaker 03:
She said you didn't connect the dots, and they haven't identified clear error.

[00:22:31] Speaker 04:
But I'd like, you believe that she discussed Stanley Martin

[00:22:37] Speaker 04:
SC Bodner company and Cohen companies in her opinion and and offered an explanation for why that evidence Didn't establish a market value in 2013 for the property.

[00:22:49] Speaker 03:
I'm sorry.

[00:22:50] Speaker 03:
I don't I don't have a site for that I'm not sure she did by name, but she did conclude that It appears that Waverly made a calculated decision to stop marketing this property based on its assumption that the government was going to buy the property and

[00:23:07] Speaker 03:
That assumption, as it turns out, was not well-founded.

[00:23:11] Speaker 03:
It doesn't appear to have been based on anything the government actually said, that the government was going to buy this property.

[00:23:18] Speaker 03:
It appears to be based on Waverly's own hopes of what would happen.

[00:23:23] Speaker 03:
And they were putting a lot of money into lobbying to try to make that happen.

[00:23:29] Speaker 03:
But the government has not occupied 100% of this property.

[00:23:33] Speaker 03:
And there is no right taking its claim for any future.

[00:23:38] Speaker 04:
Certainly there can be a stigma claim.

[00:23:40] Speaker 04:
If the government announces that we've taken over this property for wells, but we believe the contamination extends under the entire property.

[00:23:48] Speaker 04:
The minute the government makes such a statement, it is definitely stigmatizing development on the rest of the property.

[00:23:53] Speaker 04:
Nobody's going to, I sure don't want to build a house and raise my children on top of groundwater contaminated with stuff that gives people cancer.

[00:24:00] Speaker 03:
Well, a couple of things.

[00:24:01] Speaker 03:
First, the government has not taken over this property.

[00:24:04] Speaker 03:
Even during the right of entry, the government activities not exclude waverly.

[00:24:09] Speaker 03:
The fact that there are wells out there today,

[00:24:11] Speaker 03:
does not prevent, as a practical matter, Waverly from developing this property.

[00:24:16] Speaker 03:
There's testimony in the record.

[00:24:18] Speaker 04:
No, but their argument is that it stigmatized the property such that nobody would ever develop that property given the articulated contamination under it.

[00:24:28] Speaker 04:
And they're saying the presence of the wells is sort of a

[00:24:31] Speaker 04:
an overt visual sign.

[00:24:33] Speaker 04:
I mean, look, somebody can walk down the street and they don't look so damaged.

[00:24:37] Speaker 04:
But if now they're walking on crutches and they've got bandages, they look a little worse for wear.

[00:24:41] Speaker 03:
Well, and here's the problem, though.

[00:24:43] Speaker 03:
First, the court rejected that idea.

[00:24:46] Speaker 03:
And secondly, a couple things.

[00:24:49] Speaker 03:
As a practical matter.

[00:24:50] Speaker 03:
I don't know why the court rejected that idea.

[00:24:51] Speaker 03:
Well, for one thing, there is a lot of testimony about

[00:24:57] Speaker 03:
other developments that have gone ahead with monitoring wells just like this.

[00:25:01] Speaker 01:
Well, it's a long Court of Claims opinion, but she does make findings that whatever stigma may have attacked to the Waverly View property, it predated WVI's ownership and the government's taking of certain portions of the property in 2014.

[00:25:20] Speaker 01:
So I see that she's made those findings in several places in her opinion.

[00:25:27] Speaker 01:
Like at 82 through 86.

[00:25:29] Speaker 01:
Is that what you're referring to?

[00:25:31] Speaker 03:
Right.

[00:25:32] Speaker 03:
And some of that is with regard to the phase one development across the street.

[00:25:37] Speaker 03:
But I think the same applies.

[00:25:39] Speaker 03:
The idea that what would phase

[00:25:43] Speaker 03:
purchasers or other developers is not the cancer cluster and the contamination in private wells and the newspaper articles and the Kristen Rene Foundation and all these periodic meetings, public meetings by the army where they are sharing their information and their projections of contamination on private property.

[00:26:07] Speaker 03:
It's not all of that stuff.

[00:26:09] Speaker 03:
It's just these wells that are part of the ultimate cleanup.

[00:26:12] Speaker 04:
So did all of that other stuff pre-date?

[00:26:15] Speaker 04:
Yes.

[00:26:16] Speaker 03:
Waverly's ownership.

[00:26:18] Speaker 03:
Yes.

[00:26:19] Speaker 03:
And in the Court of Federal Claims opinion, and I'm sorry I don't have a page number for you, but she walks through all of the information that Waverly would have had before purchasing the property.

[00:26:30] Speaker 03:
They bought into this uncertainty about both the extent of contamination and the possibility of future government action.

[00:26:39] Speaker 03:
There is testimony about several other army facilities or instances of army contamination where there is cleanup going on alongside, next door to, within development, monitoring wells that are flush with the ground that are so unobtrusive they're hard to locate.

[00:27:02] Speaker 03:
There's also testimony that

[00:27:06] Speaker 03:
If there are particular wells that are an impediment to development here, the army can accommodate that.

[00:27:15] Speaker 03:
The army is used to working in existing developments or with entities that are wanting to develop and locating wells so that everybody can work together here.

[00:27:27] Speaker 03:
That testimony is in the appendix at 665, 666, 724, 725, and 1829 and 1830.

[00:27:36] Speaker 03:
30.

[00:27:36] Speaker 03:
And the examples of other sites are at appendix 661 through 665.

[00:27:42] Speaker 04:
If there's a portion of the blue brief, I'd say 21 to 30, and then the conclusion that seems to be devoted to understanding or interpreting the right of entry as expressly reserving the right to bring a takings clause or takings claim.

[00:27:57] Speaker 04:
I don't see how that affects the stigma claim.

[00:27:59] Speaker 04:
So let's just put that aside for these purposes.

[00:28:02] Speaker 04:
The only thing I can think of that that would affect

[00:28:05] Speaker 04:
is really just the property which ended up being valued permanently at $56,000, it would affect whether or not a taking could have been alleged on that property as of the day the right of entry began.

[00:28:19] Speaker 04:
So basically, two years of additional use of a property whose permanent value was assessed at $56,000, or maybe the interest.

[00:28:30] Speaker 04:
But we're talking about

[00:28:32] Speaker 04:
thousand or a couple thousand bucks at most is that right is that argument I can't that's right I couldn't see how that argument helped at all in the stigma scenario because the stigma scenario is entirely

[00:28:42] Speaker 04:
fact, based on different issues.

[00:28:45] Speaker 04:
But that would be the only thing I could see affected by the contractual interpretation of the right of entry was possibly a couple of thousand dollars of damages for the space.

[00:28:56] Speaker 03:
I think that's the correct way to view it.

[00:28:59] Speaker 03:
My sense is that what they would like to do

[00:29:02] Speaker 03:
is have you have the date of taking earlier so that in their view, before the government monitoring, this was a clean site.

[00:29:10] Speaker 03:
And after the monitoring, oh, now it's a contaminated site.

[00:29:13] Speaker 03:
And of course, for all the reasons that we've already talked about, that is not an appropriate view of the before condition.

[00:29:19] Speaker 03:
I see.

[00:29:19] Speaker 04:
So if I were to understand the right of entry as reserving the right to allege a taking occurred the day you entered and not actually giving you permission to enter, but sort of you're entering under my protest.

[00:29:30] Speaker 04:
That's their argument.

[00:29:32] Speaker 04:
If I were to interpret it that way, that would change the nature of the factual record in terms of what?

[00:29:39] Speaker 04:
What would that change?

[00:29:41] Speaker 03:
Again, our interpretation is it would only change the date of taking, but we do not agree, of course, with that interpretation of the reservation or their argument that the grant of access is invalid.

[00:29:57] Speaker 03:
For that reservation to

[00:30:00] Speaker 03:
essentially.

[00:30:02] Speaker 03:
also allow a taking.

[00:30:04] Speaker 03:
That would eviscerate the agreement.

[00:30:06] Speaker 03:
You can't have both consent for entry and a thinking.

[00:30:08] Speaker 03:
There wasn't an agreement here.

[00:30:09] Speaker 04:
There was an agreement.

[00:30:09] Speaker 04:
They had no choice.

[00:30:11] Speaker 04:
The government told them, we can come in with or without your permission.

[00:30:14] Speaker 04:
And if you don't give us permission, you can be on the hook for all of the liability that mirrors from our having contaminated your property.

[00:30:21] Speaker 04:
And so they said, well, we don't want you to come in.

[00:30:22] Speaker 04:
And you tried to add into the contract, you are fully and voluntarily letting us enter.

[00:30:27] Speaker 04:
And they said, but we're not fully and voluntarily letting you enter.

[00:30:30] Speaker 04:
So no, you can't put that in this.

[00:30:31] Speaker 04:
In fact, we want to reserve our right to assert a takings claim for your coming onto our property.

[00:30:38] Speaker 04:
I mean, that's how I read it and understand the facts of this case.

[00:30:42] Speaker 04:
But I just don't know that that makes any darn difference.

[00:30:44] Speaker 03:
Right.

[00:30:44] Speaker 03:
And again, I don't think it makes much difference at all.

[00:30:48] Speaker 03:
I think the only difference would be the date of taking.

[00:30:51] Speaker 03:
But the court already found a permanent taking.

[00:30:53] Speaker 03:
So it's not as though it's a taking for a term of years where the longer it's in place,

[00:30:59] Speaker 03:
the more compensation would be required.

[00:31:01] Speaker 03:
It's already a permanent taking.

[00:31:02] Speaker 03:
So it's not clear what effect it really has.

[00:31:04] Speaker 03:
But I do want to push back about the idea that they entered this under duress.

[00:31:09] Speaker 03:
Because to show duress for a contract, it's not just that it's involuntary.

[00:31:15] Speaker 03:
It's also that they truly had no other choice.

[00:31:18] Speaker 03:
they made perfectly clear that they knew they had another choice.

[00:31:22] Speaker 03:
They'd been saying no for a long time before they finally agreed to sign this.

[00:31:26] Speaker 01:
What happened when the agreement expired?

[00:31:29] Speaker 01:
Did the government try to negotiate, and they said no to that?

[00:31:32] Speaker 01:
Or was there, I think I recall seeing that there was an effort, but I don't remember.

[00:31:37] Speaker 03:
So the government did try to negotiate for an extension.

[00:31:40] Speaker 03:
They said no, and we have not re-entered the property since then.

[00:31:44] Speaker 03:
The Army has a policy of really working with landowners,

[00:31:48] Speaker 03:
does not want to enter property without agreement.

[00:31:52] Speaker 03:
But the third element, it's not just that they had no other choice, which Judge Moore, you suggested that, in your view, maybe they did have no other choice.

[00:32:01] Speaker 03:
They have to have no other choice because the government did something wrongful.

[00:32:04] Speaker 03:
And all the government did here was explain the circular statutory scheme.

[00:32:09] Speaker 04:
Regardless of whether there's duress or not, I can still, as a matter of contract interpretation, which is a question of law, read

[00:32:19] Speaker 04:
reservation of the right to bring a takings claim as applying to your current entry.

[00:32:26] Speaker 04:
You may enter my property subject to your understanding that I may assert a takings claim for the fact that you've entered my property.

[00:32:35] Speaker 04:
That doesn't require duress or bad faith or anything else.

[00:32:40] Speaker 03:
Right, they have a couple different arguments.

[00:32:44] Speaker 03:
Our position is that reading the reservation that broadly essentially eviscerates the consent in this agreement.

[00:32:51] Speaker 03:
And you can't have a better reading, in our view, to read that reservation more narrowly.

[00:32:59] Speaker 04:
Why shouldn't you have to compensate them?

[00:33:01] Speaker 04:
You had a major leak of deadly material on a property that is controlled by the government that is adjacent to their property.

[00:33:12] Speaker 04:
You are concerned that the leak has affected their property.

[00:33:17] Speaker 04:
You need to go in and install wells.

[00:33:18] Speaker 04:
This isn't a matter of somebody just going in and taking a look.

[00:33:20] Speaker 04:
You have to install wells.

[00:33:21] Speaker 04:
You have to build a road through the middle of it.

[00:33:23] Speaker 04:
Why shouldn't that be compensable?

[00:33:26] Speaker 04:
You have potentially, whether you did or not, potentially damaged someone else's property.

[00:33:31] Speaker 04:
And the only way you can figure out the extent of the damage is to go onto that property and to use it during that time.

[00:33:36] Speaker 04:
Why shouldn't that be a compensable event?

[00:33:39] Speaker 03:
Well, and to be clear, the Court of Federal Claims found it was compensable and found that there was a taking of the area of those wells, the road, and a buffer around the wells.

[00:33:48] Speaker 03:
We did not appeal that decision.

[00:33:50] Speaker 03:
And compensation will be paid.

[00:33:53] Speaker 03:
So the answer to your question is basically yes.

[00:33:55] Speaker 03:
I mean, the court found it was a taking.

[00:33:58] Speaker 03:
And if the United States needs to re-enter this property, if Waverly chooses not to give consent, if the United States again enters the property and Waverly files a takings claim,

[00:34:11] Speaker 03:
At that point, a court would have enough information to assess whether that new occupation amounted to a taking.

[00:34:19] Speaker 03:
But right now, all there is, as the federal claims put it, is these wells.

[00:34:28] Speaker 03:
And a road, and as the court put it, a buffer around the wells.

[00:34:33] Speaker 03:
And the court's approach to valuing that taking was reasonable.

[00:34:39] Speaker 03:
She looked at all of the evidence, and that was a reasonable approach.

[00:34:44] Speaker 03:
They haven't shown clear error.

[00:34:46] Speaker 01:
Who ascribed that value to it?

[00:34:48] Speaker 01:
Was that value contested?

[00:34:51] Speaker 01:
I know, obviously, they were asking for $9 million, so they were asking for a great deal more than that.

[00:34:55] Speaker 01:
but with respect to the actual numbers.

[00:34:58] Speaker 01:
Was that their proposal or your proposal?

[00:35:02] Speaker 03:
It's a little bit complicated.

[00:35:04] Speaker 03:
I'll do my best.

[00:35:06] Speaker 03:
The square footage number, the price per square foot that the court settled on was essentially Waverly's number.

[00:35:17] Speaker 03:
The parties did contest the number of square feet that was the taking.

[00:35:23] Speaker 03:
And the court ultimately used Waverly's number using that 25-foot buffer.

[00:35:27] Speaker 03:
The United States submitted that it didn't need that much space, that really, if indeed it needed to, if these wells were permanent taking, which of course we argued below that it wasn't, that we didn't need them at all, that really the United States needed a much smaller area.

[00:35:42] Speaker 02:
So are these wells still in operation?

[00:35:45] Speaker 02:
Is that 56,000?

[00:35:46] Speaker 02:
Is that in perpetuity or up to the date of filing or what?

[00:35:52] Speaker 03:
That's in perpetuity.

[00:35:52] Speaker 03:
That's for a permanent taking.

[00:35:54] Speaker 03:
The wells are still there.

[00:35:56] Speaker 03:
The United States has not revisited them since.

[00:35:59] Speaker 02:
Is the cleanup continuing?

[00:36:01] Speaker 02:
Yes.

[00:36:02] Speaker 03:
There's a pilot project where the Army is going to be testing a couple methods for cleaning this site up.

[00:36:10] Speaker 03:
That's going to be taking

[00:36:11] Speaker 03:
place fully on army property on the other side of the fence, and that's about to start.

[00:36:16] Speaker 03:
So cleanup is, these things take time, and it's underway.

[00:36:21] Speaker 04:
Well, you found there's contamination under their land.

[00:36:24] Speaker 04:
How do you clean that up?

[00:36:25] Speaker 03:
Well, these things are hydrologically connected.

[00:36:28] Speaker 03:
And so the idea, they're going to see anyway if they can do this cleanup fully from army lands.

[00:36:35] Speaker 04:
So inevitably, that would require having to go back to those wells.

[00:36:38] Speaker 04:
But that's OK, because you now own them.

[00:36:40] Speaker 04:
But it would require going back to those wells and testing to see if it was successful.

[00:36:44] Speaker 03:
Potentially.

[00:36:44] Speaker 03:
And again, if those wells are in locations that truly interfere with the development plans, the undisputed testimony at trial is that the Army can and will work with Waverly to move or remove any wells that it needs to.

[00:37:03] Speaker 01:
Thank you.

[00:37:03] Speaker 03:
We ask that you affirm.

[00:37:04] Speaker 03:
Thank you.

[00:37:06] Speaker 01:
Restore two minutes of rebuttal, sir.

[00:37:10] Speaker 00:
When the right of entry expired, Waverly offered to extend it if the government simply stipulate that that would not waive Waverly's rights in this Takings case.

[00:37:21] Speaker 00:
And the government would not so stipulate.

[00:37:23] Speaker 00:
That's why the right of entry was not renewed.

[00:37:26] Speaker 00:
If the government would have simply stipulated that renewing the right of entry didn't waive our existing Takings claim, we would have signed it.

[00:37:34] Speaker 00:
That's the evidence.

[00:37:37] Speaker 00:
Councilor, my friend referred to this calculated business decision not to try to sell and market the property anymore, but instead to focus all efforts exclusively on selling it to the government.

[00:37:48] Speaker 00:
And this is what the court cited in support of its decision that Waverly made a calculated business decision not to try to develop.

[00:37:57] Speaker 00:
Mr. Dormant, the managing manager, made a reference and a letter to shareholders of an opportunity in crisis, by which he meant

[00:38:06] Speaker 00:
that maybe we can sell the property to the government because he couldn't sell it or market it to a private developer.

[00:38:13] Speaker 00:
The whole reason he referred to it as an opportunity in crisis was because the crisis was that there was no home builder who would buy it.

[00:38:23] Speaker 00:
But maybe there was an opportunity to salvage something by selling it to the government.

[00:38:27] Speaker 00:
That doesn't show a calculated business decision not to try to market it to private home builders.

[00:38:32] Speaker 00:
In fact, at the very same time,

[00:38:36] Speaker 00:
that Mr. Dormant referred to this opportunity in crisis.

[00:38:38] Speaker 00:
They were negotiating the deal with the Cohen companies, a deal that also fell apart because of perception issues arising out of the EPA's occupation of the property.

[00:38:50] Speaker 00:
My friend says there's a policy of working with developers.

[00:38:55] Speaker 00:
The court found there was no such policy at the appendix at page 297 during the trial said, we have learned there is no such policy.

[00:39:04] Speaker 00:
And in her opinion,

[00:39:05] Speaker 00:
At Appendix 84, the court said the court does not view the government's testimony as evidencing a policy mandating the Army or the EPA to accommodate development.

[00:39:17] Speaker 00:
That's the evidence.

[00:39:18] Speaker 00:
And at trial, the court ridiculed the suggestion that somehow Waverly was obligated to go to the government and try to figure out how to accommodate the government's plans when the government didn't know what its plans were.

[00:39:32] Speaker 00:
But here's what we do know.

[00:39:34] Speaker 00:
We know the following, that the Army's project manager, Mr. Gortford, testified that he had identified six locations where he wanted to drill additional wells to define the contours of this migrating plume.

[00:39:49] Speaker 00:
We know that any remedy would take decades to implement.

[00:39:53] Speaker 00:
And we know that any remedy will have to be reevaluated every five years to determine whether it's effective.

[00:39:59] Speaker 00:
And we know that, and all the witnesses have acknowledged this, any remedy will require on-site monitoring for 30 years or more.

[00:40:08] Speaker 00:
That is why the government told Waverly back in April of 2013,

[00:40:12] Speaker 00:
just before it came onto the property that would be on the property for decades.

[00:40:17] Speaker 00:
That was a testimony of Mr. Dorman, of Mr. Anderson.

[00:40:21] Speaker 00:
It is not denied by any government witness.

[00:40:23] Speaker 01:
You're way out of time.

[00:40:25] Speaker 01:
Thank you, Your Honor.

[00:40:26] Speaker 01:
Thank you.

[00:40:27] Speaker 01:
We thank both sides and the case is submitted.