Penna v. United States

In the United States Court of Federal Claims
No. 16-1545L
(Filed: March 23, 2021)
)
FRANK PENNA and )
LISA PENNA, )
)
Plaintiffs, )
)
v. )
)
THE UNITED STATES, )
)
Defendant. )
)
Mark R. Cuker, Cuker Law Firm, LLC, Philadelphia, PA, for plaintiffs.
Frank J. Singer, Environment & Natural Resources Division, United States Department
of Justice, Washington, DC, for defendant. With him at trial and on the briefs were
Taylor N. Ferrell, Environment & Natural Resources Division, United States Department
of Justice, Washington, DC, and Karrin Minott, Naval Litigation Office, Office of the
General Counsel, Department of the Navy; also on the briefs was Jean E. Williams,
Deputy Assistant Attorney General, Environment & Natural Resources Division, United
States Department of Justice, Washington, DC.
OPINION AND ORDER
SOLOMSON, Judge.
This case presents the question of whether Defendant, the United States, owes
Plaintiffs, Frank and Lisa Penna (“the Pennas”), just compensation for the taking of
their property (the “Property” or “Penna Property”) due to chemical contamination the
Department of the Navy allegedly caused. Before the Court is the government’s
pending motion for judgment on partial findings pursuant to Rule 52(c) of the Rules of
the United States Court of Federal Claims (“RCFC”). ECF No. 134 (“Def. 52(c) Mot.”).
At trial, the Pennas presented evidence in support of their allegation that the
government caused fluorosurfactant-based aqueous film-forming foam (“AFFF”) to be
released onto the Penna Property, which, they assert, constitutes a compensable taking
pursuant to the Fifth Amendment of the United States Constitution and the Tucker Act,
28 U.S.C. § 1491. The Court ultimately suspended trial to consider the government’s
RCFC 52(c) motion, arguing that the Pennas did not prove a compensable taking. ECF
No. 125; Def. 52(c) Mot. at 9.
Although the Pennas attempt to shoehorn their takings claim into the legal
framework applicable to direct, physical per se appropriations of property, the United
States Supreme Court and the United States Court of Appeals for the Federal Circuit
have issued a line of decisions that specifically address takings based upon alleged
government-caused flooding and that, by extension, apply to chemical contamination
cases. Those cases govern the outcome here. In that regard, after considering the
evidence the Pennas presented at trial, the Court concludes that they have failed to
carry their burden of proof and, thus, the government is entitled to judgment. In
addition, the Court imposes sanctions on Plaintiffs’ counsel for violating discovery
obligations.
I. PROCEDURAL HISTORY
A. The Complaint
On November 18, 2016, the Pennas filed suit in this Court, alleging that the
Navy’s use of hazardous chemicals resulted in the contamination of both the Pennas’
water supply and ground soil, amounting to a compensable Fifth Amendment taking of
their Property. ECF No. 1 (“Compl.”) ¶¶ 6, 26, 30. The Pennas contend that
perfluorochemical compounds (“PFCs”), including perfluorooctanoic acid (“PFOA”)
and perfluorooctanesulfonic acid (“PFOS”), were “used extensively at Willow Grove in
fire-fighting foam materials for decades up until 2010,” Compl. ¶ 8, and “deliberately
channeled” by the Navy into a swale running across the Penna Property. Compl. ¶ 24.
According to the Pennas, chronic exposure to PFCs is toxic to human health and
associated with many potential adverse effects, such as an increased risk of developing
various cancers that could “manifest themselves months or even years” after exposure.
Compl. ¶¶ 7, 9–14. The Pennas aver that although the Environmental Protection
Agency (“EPA”) has determined that PFOA and PFOS pose potential adverse effects for
the environment and human health, the government failed to prevent PFC use and
disposal at Willow Grove and to prevent and abate PFC contamination in water sources
(including the Pennas’ private well). Compl. ¶¶ 16–17. The Pennas allege that they
used their well “for all domestic water purposes” until learning that the levels of PFOA
and PFOS “far exceeded the EPA’s then provisional Health Advisory Level . . . of 0.2
μg/l for PFOS and 0.4 μg/l for PFOA.” Compl. ¶ 21.
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The Pennas contend that the Navy intentionally directed contaminated runoff
from Willow Grove towards the Penna Property and discharged drainage from a PFC-
contaminated Fire Training Area “directly onto [the Pennas’] property,” rendering it
virtually valueless. Compl. ¶¶ 24, 26–27. Accordingly, the Pennas claim that because
the government’s actions amounted to a taking of their Property, they are entitled to
just compensation. Compl. at 6.
B. Discovery And Summary Judgment Briefing
Following briefing on the parties’ cross-motions for partial summary judgment,
the Court held oral argument on April 3, 2019. ECF Nos. 38, 47, 54, 61; Minute Entry,
Apr. 3, 2019. On April 4, 2019, the Court issued a written order denying both cross-
motions for summary judgment. ECF No. 64. On May 21, 2019, the Court set a
discovery schedule for the case. ECF No. 71.
On February 5, 2020, this case was reassigned to the undersigned judge. ECF
Nos. 83, 84. Discovery closed on March 13, 2020, see ECF No. 82, and the parties filed
their pretrial memoranda. ECF Nos. 88 (“Pl. Memo.”), 101.
C. The Trial
Trial commenced on August 3, 2020 via video-conference.1 See Minute Entry,
Aug. 3, 2020. Over the course of four days, the Pennas presented testimony from three
fact witnesses and three expert witnesses.
The Pennas’ first witness, Mr. Tony Gilliam, testified regarding his experience
working as a fire fighter and then a battalion chief at Willow Grove. Tr. 55:24–56:15.2
He testified that AFFF foam was regularly used in training exercises on the Base, which
included dispersing thousands of gallons of AFFF on the Base for years. Tr. 62:5–63:24.
The Pennas next played excerpts from the video deposition of Mr. Ronald Kroop,
a wastewater treatment engineer with the Air Force, who discussed what he believed
“the Government actually knew in the early 1970s” about the environmental effects of
1 Trial in this matter was originally scheduled to take place in May 2020 in Philadelphia,
Pennsylvania. See ECF No. 71. In light of the COVID-19 pandemic, however, the Court granted
the government’s motion for a continuance, ECF No. 91, and vacated both the May and
proposed June trial dates. ECF No. 96 at 3; see also Order (Fed. Cl. Mar. 16, 2020) (Sweeney, C.J.)
(restricting public access to the National Courts Building until further notice). Thereafter, the
Court set trial in this matter to be conducted virtually, via videoconference, utilizing the Cisco
Webex platform. ECF No. 116 at 1.
2 “Tr.” refers to the transcript of trial proceedings, conducted August 3–6, 2020.
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AFFF. Tr. 97:11–20.3 Mr. Kroop also described the methods he had recommended to
dispose of AFFF waste, memorialized in a report he had authored in February 1974. Tr.
19:8–21:7, 105; Plaintiffs’ Exhibit (“PX”) 3. The Pennas relied upon Mr. Gilliam’s
testimony for evidence of the Navy’s regular use of AFFF on the Base, and upon
Mr. Kroop’s testimony to support their contention that the Navy knew of the potential
hazards stemming from AFFF and that the Navy did not properly dispose of the
chemicals despite such knowledge.
Mr. Frank Penna testified third. Tr. 182. He described his experience with the
Penna Property, including when he first learned of the PFOA and PFOS levels there (Tr.
196:25–197:4), his communication with the government regarding the issue (Tr. 201:16 –
203:6), and his own efforts to have testing done on the Property’s soil and water (Tr.
198:15–19, 199:4–13; PX 58). Notably, when asked about the value of the Property in its
current state (i.e., contaminated), Mr. Penna testified that he believed “it’s not worth
anything today. Zero.” Tr. 208:17–21.
The Pennas also presented testimony from several experts about the impact of
the contamination of the Property, including: (1) Mr. Matthew Mulhall (geology and
hydrogeology); (2) Mr. Frank Cammarata (mortgages); and (3) Mr. John Hosey
(property appraisal and valuation).
On August 4, 2020, Mr. Mulhall testified about the existence, extent, and
foreseeability of contamination of the Penna Property resulting from the Navy’s use of
AFFF at the Willow Grove base.4 Tr. 310.
Next, Mr. Cammarata opined that the presence of PFOS and PFOA on the Penna
Property presented an immitigable hazard, rendering the Property ineligible for a
mortgage. PX 130 at 6; Tr. 364:1–4. He based his opinion on the guidelines and
regulations for residential mortgages issued by the United States Department of
Housing and Urban Development (“FHA”), the United States Veterans Administration
(“VA”), the Federal National Mortgage Association (“Fannie Mae”), and the Federal
Home Loan Mortgage Corporation (“Freddie Mac”). Tr. 359:25–360:9. He also relied
upon an engineering study by M2 Associates, Inc. – i.e. Mr. Mulhall’s report – as well as
3Mr. Kroop unfortunately passed away in June 2020. His video deposition had been taken a
year prior, however, and thus was accepted in lieu of live testimony. Tr. 19:8–11; FRE 804(a)(4)
(“A declarant is considered to be unavailable as a witness if the declarant . . . cannot be present
or testify at the trial or hearing because of death[.]”).
4Mr. Mulhall experienced technical issues with his internet connection on the day he initially
testified. Tr. 355:21–23; 417:15–23. Consequently, the government was not able to cross-
examine him until two days later, on August 6, 2020. Tr. 612.
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property appraisals provided to him by both the Pennas and the government. Tr.
360:19–23. In particular, Mr. Cammarata testified that “all of the departments and
agencies require that once a hazard is found and noted by the appraiser, then the
hazard must be mitigated or the property is not an eligible, mortgageable property.”
Tr. 363:5–8. He further opined that upon reviewing the appraisals provided to him,
“neither appraiser could identify a sale of a comparably contaminated property.
Without a sale showing that a comparably contaminated property is marketable, the
property will not qualify [for a mortgage].” Tr. 364:5–9. In light of Mr. Cammarata’s
view that PFOA and PFOS were immitigable “hazards” within the meaning of the
agencies’ definitions, see Tr. 372:22–373:5, he concluded that the Penna Property was not
eligible for a mortgage.
Finally, Mr. Hosey opined that because the Penna Property was not
mortgageable, it had no value. PX 131 at 23; Tr. 464:17–19, 510:8-12. Mr. Hosey
generally explained his research regarding the negative effects of stigma on property
value, including “the uncertainty that follows with it” and its resulting impact on
potential purchasers. Tr. 445:24–25. Mr. Hosey ultimately conceded, however, that he
did not analyze the impact, if any, of environmental stigma on the Penna Property. Tr.
467:22–468:7. Mr. Hosey also described the process by which he valued the Penna
Property in two scenarios: the uncontaminated state (i.e., absent PFOS and PFOA
contamination), and as-contaminated; he referenced multiple appraisal principles and
described his use of each. See, e.g., Tr. 452:22–456:12, 468:8–11. He explained his
determination of the “highest and best use” of the Penna Property, which he resolved to
be residential.5 Tr. 452:1–4. Mr. Hosey concluded that the Penna Property was
valueless in its current state. PX 131 at 23; Tr. 464:17–19.
D. The Joint Stipulation
On August 3, 2020, prior to opening arguments, the government informed the
Court that PX 65 — an email from the Pennas’ real estate agent, regarding a potential
sale of the Property — was incomplete.6 Later, during the government’s cross-
examination of Mr. Penna, the government utilized and sought to introduce into
evidence certain parts of Defendant’s Exhibit (“DX”) 322, which included additional
5 The four tests used to determine the highest and best use of a property are physical possibility,
legal permissibility, financial feasibility, and maximum productivity. Once a highest and best
use is determined, there are generally three approaches to valuation in appraisal science: the
sales comparison approach, the income approach, and the cost approach. Tr. 470:11–22.
6 Tr. 11:15–19 (“[MR. FERRELL]: PX 65[ ] that we received from Plaintiffs on Friday . . . is in a
different form than what we were expecting. We had in our files for Plaintiffs’ Exhibit 65 a
longer composite exhibit.”).
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emails (and attachments) originally produced by the Pennas along with the email
constituting PX 65. See Tr. 249:16–250:10.
In addition, when the government asked Mr. Penna about the attempted sale of
the Property, the government relied upon PX 64, which, according to the Pennas’
exhibit list, was a written sales agreement for the Property. In fact, that document
turned out to be only an excerpt of a proposed purchase agreement – an offer to buy the
Property – and an altered one at that. See, e.g., Tr. 251:5–12. On redirect, the Pennas’
counsel of record, Mr. Mark Cuker, proceeded to use what appeared to be a complete
copy of a proposed sales agreement, including documents that related to, but were not
contained in, DX 322. Mr. Cuker readily admitted that the apparently more complete
property sales agreement was not one of the Pennas’ proposed exhibits. See Tr. 271:5–7
(“[MR. CUKER]: It is not in my [exhibit] binder. I am simply using it because it’s been
placed in issue here, in having the witness explain the cross examination.”). In response
to Mr. Cuker’s assertion, the government objected on the grounds that “[t]his is the first
time that we are seeing this document. This has not been produced to the
Government.” Tr. 274:22–24.
This turn of events, in the middle of trial, prompted the Court to note its concern
that Mr. Cuker had not provided the government with the full version of the sales
agreement Mr. Cuker displayed during his redirect examination of Mr. Penna. Tr. 275.
Mr. Cuker hypothesized that the version of the agreement he attempted to use was not
produced to the government during discovery because the document likely was not
responsive to the government’s discovery requests. Tr. 275:6–9. The Court rejected that
assertion as highly improbable, and Mr. Cuker never attempted to demonstrate
otherwise (e.g., by referencing a particular document request). See Tr. 275:10–12.
Because the Court had trouble understanding the facts, documents, and
testimony surrounding what appeared to be a bona fide offer to purchase the allegedly
worthless Penna Property— combined with the Court’s concern about the possible
failure of the Pennas to produce documents during discovery — the Court instructed
the parties to meet-and-confer regarding what PX 64 and PX 65 should have included,
and to determine which parts, if any, of DX 322 — or any other documents related to
the offer to purchase the Property — should be admitted into evidence. See Tr. 259:1–6.
Furthermore, the Court ordered Mr. Cuker to produce to the government any
previously unproduced documents or emails connected to the offer to purchase the
Penna Property, including the complete version of the sales agreement that Mr. Cuker
used during his redirect examination of Mr. Penna. See Tr. 280:12–281:7.
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On August 4, 2020, and then again on August 5, 2020, the parties informed the
Court that they still had not reached an agreement regarding PX 64, PX 65, DX 322, or
any other documents relating to the potential sale of the Property that previously had
not been disclosed during discovery.
Finally, on August 6, 2020 – during a recess of the trial proceedings – the parties
filed a stipulation regarding the attempted purchase of the Penna Property (the
“Stipulation”). ECF No. 124 (“Stip.”).7 Notably, the Pennas stipulated, among other
facts, that “[t]he prospective sale of the [Penna] property did not fail because of
environmental issues.” Id. ¶ 31 (emphasis added). 8 The Stipulation was necessary, at
least in-part, to address prejudice to the government arising from nearly 100 new pages
of documents the Pennas produced for the first time during trial, following the Court’s
order to do so. Mr. Cuker contended that any untimely production was inadvertent,
and, in any event, the documents were duplicative of yet others that were produced
during the discovery period. Ultimately, however, the Stipulation and the newly
produced documents refute – or significantly undermine – the Pennas’ central factual
assertions in their pretrial Memorandum Contentions of Fact and Law regarding the
nature and extent of the government’s alleged taking. Compare Pl. Memo. ¶ 110, with
Stip. ¶¶ 9–30.
E. The Parties’ RCFC 52(c) Briefing
On August 6, 2020, following the close of the Pennas’ case and particularly in
light of the Stipulation, discussed supra, the Court suspended trial to permit the
government to file its motion for judgment on partial findings pursuant to RCFC 52(c)
and to address Mr. Cuker’s potential discovery violation and other related issues. See
7As part of the Stipulation, the parties agreed to the admission of ten documents into evidence.
See ECF Nos. 124-1 – 124-10 (DX 323–332). The Court hereby admits those exhibits into
evidence to the extent they were not previously so admitted.
8 The parties stipulated to various facts that contradicted or undermined the Pennas’ assertions
in their Memorandum Contentions of Fact and Law, and other testimony. Compare Stip. ¶ 1
(“On August 9, 2018, Plaintiffs’ realtor, Kathi Coletti, e-mailed Plaintiffs regarding the listing of
their property . . . . The e-mail states, in part, that ‘[t]he liens and judgments plus mortgages are
so high not sure if it can go out to realtors for sale if there is no money to pay their
commission.’”), with Tr. 243:25–244:6 (“[MR. PENNA]: [W]e gave him the [environmental]
disclosures. And then I was told it got complicated for him and he backed out, after the
disclosures. He didn’t have the disclosures when he wanted to buy it, but I am sure that the
realtor gave him those disclosures. I didn’t want Lisa and I to be held responsible for anything
later on down the line.”); compare also Stip. ¶ 9 (“On August 23, 2018, two prospective buyers
signed an offer to purchase the Property at a price of $725,000”), with Pl. Memo. ¶ 110 (“An offer
for $746,000 was made[.]”).
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ECF No. 125; Tr. 743:23–744:3. In a subsequent order, issued on August 10, 2020, the
Court instructed the parties to address several issues in their briefs, including whether
the Pennas had provided sufficient evidence at trial of a compensable taking pursuant
to the Fifth Amendment of the United States Constitution and the Tucker Act. ECF No.
125 at 5. Additionally, the Court sought the parties’ views regarding whether there had
been any violations of this Court’s discovery rules or professional ethics rules, including
whether Mr. Cuker violated his duty of candor to the Court. Id. at 5–8.
In accordance with the briefing schedule requested by both parties, see ECF
No. 132, the government filed its motion for judgment on partial findings pursuant to
RCFC 52(c) on August 28, 2020. See Def. 52(c) Mot. On September 18, 2020, the Pennas
filed their response in opposition to the government’s motion. ECF No. 136 (“Pl.
Resp.”). On October 2, 2020, the government filed its reply in support of its motion.
ECF No. 138 (“Def. Rep.”). The Court held oral argument on October 7, 2020. Minute
Entry, Oct. 7, 2020.
II. FACTUAL FINDINGS9
A. The Parties And Property
The Pennas are a married couple who reside at 410 Norristown Road, Horsham,
Pennsylvania 19044. Compl. ¶ 1. The Pennas have resided at their present address, the
subject Property of their takings claim, since 1994. Id. ¶ 19. Defendant, the United
States, acting through the United States Department of the Navy (the “Navy”), has
owned the Naval Air Station Joint Reserve Base Willow Grove (“Willow Grove” or the
“Base”), located in Horsham Township, Montgomery County in southeastern
Pennsylvania, from 1942 to present. ECF No. 7 (“Ans.”) ¶ 2; JX 33 at US00051065. The
Base was operated by the Navy, in conjunction with other service branches, from 1942
to March 2011, and is now maintained by the Navy Base Realignment and Closure
Program Management Office. Id. ¶ 5. The Navy’s use of AFFF on the Base, the
allegedly resulting contamination of the Penna Property, and the asserted adverse
effects of such contamination on the value of the Property form the foundation of the
Pennas’ claim.
9This recitation of facts constitutes the Court’s principal findings of fact in accordance with
RCFC 52(a). Other findings of fact and rulings on questions of mixed fact and law are contained
in the discussion sections of this opinion, see infra Sections V, VI.
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B. The Navy’s Use Of AFFF On The Base And The Subsequent
Contamination Of The Penna Property
AFFF is a fluorinated surfactant-based foam that the military and commercial
aviation sector has been using since the early 1970s to extinguish petroleum fires. JX 4
at US00006851; JX 19 at US00004476. AFFF contains PFCs, which include PFOA and
PFOS. JX 33 at US00051066. PFOA and PFOS are manmade chemicals that are used for
a wide variety of residential, commercial, and industrial purposes, including clothing,
food packaging, cookware, and firefighting. 10 DX 207 at US00001923.
The relevant locations of the Base are the Fire Training Area and Building 177,
the two alleged sources of PFOA and PFOS that resulted in the contamination of the
Penna Property. The Base’s Fire Training Area, approximately 1,600 feet
north/northeast of the Penna Property, was used for large-scale firefighting exercises.
JX 11 at US000010440; PX 128 at 13. Building 177, approximately 1,700 feet northwest of
the Penna Property, served as a hangar and maintenance facility for various military
aircraft. JX 18 at US00036111.
The Pennas allege, and the government does not dispute, that AFFF was used on
the Base while it was operational. JX 33 at US00051066; see also Def. 52(c) Mot. at 11.
While the parties dispute whether any AFFF contamination of the Property was
intentional, foreseeable, or otherwise the direct, natural, or probable result of the
government’s use of AFFF,11 the Court declines to make a factual finding on those
issues (as explained in more detail below). Instead, the Court focuses its decision here
on whether or to what extent the government interfered with the Pennas’ use of their
10 PFOS and PFOA are not “hazardous substances” as defined in the Comprehensive
Environmental Response, Compensation, and Liability Act (“CERCLA”) § 101(14), codified at
42 U.S.C. § 9601(14), nor are they “hazardous wastes” under the Resource Conservation and
Recovery Act (“RCRA”), codified at 42 U.S.C. § 6903. See JX 42 at US00066429. PFOS and PFOA
are also not considered “hazardous substances” under Pennsylvania’s Hazardous Sites Cleanup
Act (“HSCA”), codified at 35 Pa. Stat. Ann. § 6020.103 (West); see Giovanni v. United States Dep't
of the Navy, 433 F. Supp. 3d 736, 746 (E.D. Pa. 2020).
11The parties dispute whether the contamination of the Penna Property was the direct, natural,
or probable result of the Navy’s use of AFFF on the Base – specifically, at the Fire Training Area
and Building 177. Plaintiffs contend that the Navy’s AFFF use on the Base caused runoff water
to flow downhill to the Penna Property, contaminating its soil and private well. Compl. ¶¶ 24,
26–27. The Navy contends, in contrast, that not only did it have physical mechanisms in place
to collect contaminated water and prevent its migration, but also that the migration path of any
water from the Base would not lead to the Penna Property due to the topography of the
surrounding land. ECF No. 134 at 4, 23–24. The government instead attributes the chemicals on
the Penna Property to an F-14 plane crash in 2000 that occurred 300 to 400 feet north of the
Penna Property and was extinguished using AFFF. ECF No. 101 ¶¶ 36–37.
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Property or appropriated a benefit at their expense. ECF No. 101 ¶¶ 26–27, 32–33.
In September 2011, the Navy conducted groundwater sampling for PFOA and
PFOS from four monitoring wells within the Base’s Fire Training Area, which revealed
the presence of both compounds. JX 33 at US00051066; PX 128 at 11. Later, in 2014,
Mr. Penna first learned about potential PFOA and PFOS contamination in the area, and,
consequently, he arranged to have his Property (including a private well) tested. Tr.
196:25–197:10. In August 2014, Analytical Labs, a private company, performed testing
that showed heightened levels of PFOA (0.298 μg/L) and PFOS (0.701 μg/L) in the
Pennas’ well-water. Tr. 198:12–199:2; see ECF No. 136-2. The EPA itself tested the
Penna’s well, which also revealed the presence of PFOA and PFOS. Tr. 199:4–16; JX 33
at US00051066. In 2015, the Navy provided the Pennas with a written notice that PFOS
and PFOA were detected in their private well in concentrations exceeding the EPA’s
provisional human health advisory for drinking water. PX 58.
Although the Pennas claimed that they had used their private well until 2014 for
“drinking, watering shrubs, watering [their] trees, washing [their] vehicles, in the office,
[and] filling up [their] cooler every day,” Tr. 197:11–17, the Pennas’ primary source of
water for most of their house since 2005 came from public water; the entire house has
been serviced by public water since 2010. Indeed, while the Pennas alleged that their
“water supply came entirely from a private well located on their property,” and that
they “used their well for all domestic water purposes until late 2014” when they
received the Navy’s notice, Compl. ¶¶ 20–21, the Penna Property was connected to
municipal water because of inadequate water pressure, not due to contamination. Tr.
215:11–216:6; Tr. 197:21–198:7. The Navy has provided bottled drinking water to the
Pennas’ on-site business since 2014.12 Tr. 203:4–6.
C. Attempts To Sell The Penna Property
In 2013, prior to learning of the PFOA and PFOS contamination on the Property,
Mr. Penna spoke to a realtor about potential investment opportunities involving the
Property, including subdividing the land and selling the house. Tr. 203:11 –16, 204:9–
205:4. Although the Pennas halted any such plans in 2014 after the Navy notified the
Pennas of the AFFF contamination, Tr. 205:5–13, the Pennas ultimately listed their
12Mr. Penna ran a landscaping business from his garage. Tr. 231:21–25. When Mr. Penna
initially communicated with the Navy regarding the contamination on the Property, the Navy
offered to pay a tapping fee to provide public water to Mr. Penna’s business. Tr. 201:16–202:11.
Because Mr. Penna would have had to bear the expense of running a line from Norristown
Road to the business, the Pennas and the Navy ultimately agreed that the Navy would supply
bottled water instead. Tr. 202:14–203:6.
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property for sale in 2018 after speaking with several realtors. Tr. 206:3–9, 207:25–208:13.
Independent of any contamination, the Property suffers from several problems,
including a swale that frequently floods the Property when it rains, which negatively
impacts its salability. Tr. 189:21–190:3, PX 103. Indeed, as acknowledged by Plaintiffs’
realtor, Ms. Kathi Coletti, the liens, judgments, and mortgages on the Property are “so
high” that it was not clear the Property could be placed on the market.13 See Stip. ¶ 1.
Moreover, despite Mr. Penna’s impression that the Property was zoned for commercial
purposes, he had no written proof of such zoning. Id. ¶ 2.
On August 23, 2018, prospective buyers submitted a signed, bona fide offer to the
Pennas to purchase their Property at a price of $725,000. DX 328; Stip. ¶ 9. Notably, the
offer required the Pennas’ acceptance before August 25, 2018. Stip. ¶ 12. The Pennas
did not accept the purchase offer in a timely manner, but rather allowed the offer to
lapse – remarkably, at the direction of Mr. Cuker, the Pennas’ counsel of record, who
instructed them “to sign nothing until he review[ed].” Id. ¶¶ 16, 17. After the offer
lapsed, the Pennas worked with their realtor, perhaps another attorney, and Mr. Cuker
to prepare a counteroffer. DX 332. The counteroffer, dated August 30, 2018, consisted
of a “Marked Up” Agreement of Sale, including: (1) an increase in the proposed
purchase price to $746,000; (2) a change in the specified zoning to residential; and (3) the
addition of three attachments. Stip. ¶¶ 21–24, 26. The three additional attachments
included: (1) an “Addendum to Agreement of Sale”; (2) “Compensation Agreement”;
and (3) “Sellers [sic] Disclosure and Environmental Report 6/15.” 14 The cover page to
the June 15, 2018 M2 Associates, Inc. Environmental Report was attached to the August
13On August 10, 2018, Ms. Coletti forwarded a title research report to the Pennas for the
Property covering the period of July 1, 2005 – July 27, 2018 (“Title Report”). Stip. ¶ 3. The Title
Report identified a significant number of problems encumbering the Property: a February 8,
2018 mortgage foreclosure from Chase Bank in the amount of $643,215.55; an October 8, 2014
mortgage foreclosure from Stonebridge Bank in the amount of $265,737.75; ten liens filed by the
Pennsylvania Department of Revenue dated between December 5, 2007, and July 11, 2018,
totaling $35,809.95; eleven liens filed by the Pennsylvania Unemployment Compensation Fund
dated between November 24, 2008, and April 26, 2018, totaling $51,589.12; and an Internal
Revenue Service lien dated August 2, 2016, in the amount of $111,877.68. Id. ¶¶ 4–8.
14The specific changes reflected in the Pennas’ counteroffer were as follows: to alter paragraph
2(A) to increase the purchase price to $746,000 and to increase the second earnest money
deposit from $9,000 to $30,000; to alter paragraph 5(A) to require written acceptance of all
parties on or before August 31, 2018; to alter paragraph 6 to provide that zoning is “Residential
R3”; to alter paragraph 32(B) to provide for “a due diligence period of 20 days for the buyer to
confirm with Horsham Township that the property is permitted to be used for a Nursery and
Landscape Contractors shop”; and to alter paragraph 32(A) to add the three new attachments.
Stip. ¶¶ 21–24, 26.
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30, 2018 “Marked Up” Agreement of Sale. Id. ¶ 25. Plaintiffs also signed an undated
“Environmental Addendum.” Id. ¶ 27.
There is no documentary evidence whatsoever demonstrating that the Pennas –
via their realtor, Ms. Coletti, or anyone else – actually transmitted the draft counteroffer
to the prospective buyers or their real estate agent. Stip. ¶ 28. On September 12, 2018,
Ms. Coletti e-mailed her clients, the Pennas, to advise them that, “[u]nfortuantely [sic],
the Buyers have decided not to go forward with the purchase of 410 Norristown Road.
The [prospective buyers’] agent said it was getting to [sic] complicated for them.” Id.
¶ 30. There is no evidence in the record explaining what complications the prospective
buyers might have been referencing, but the critical fact is that the sale of the Penna
Property did not fail because of environmental contamination issues. Id. ¶ 31. Indeed,
if anything, the sale did not move forward simply because the Pennas effectively
declined the purchase offer tendered to them.
III. JURISDICTION AND STANDARD OF REVIEW
Pursuant to the Tucker Act, this Court’s primary jurisdictional statute, “[t]he
United States Court of Federal Claims shall have jurisdiction to render judgment upon
any claim against the United States founded . . . upon the Constitution, . . . or for
liquidated or unliquidated damages in cases not sounding in tort.” 28 U.S.C. § 1491(a).
The Tucker Act thus “provides the Court of Federal Claims with jurisdiction over [Fifth
Amendment] takings claims brought against the United States.” Casitas Mun. Water
Dist. v. United States, 708 F.3d 1340, 1359 (Fed. Cir. 2013) (quoting John R. Sand & Gravel
Co. v. United States, 457 F.3d 1345, 1354 (Fed. Cir. 2006), aff’d, 552 U.S. 130 (2008)).
Before the Court is the government’s motion for judgment on partial findings
pursuant to RCFC 52(c), in which the government argues that the Pennas failed to meet
their burden of proof at trial to demonstrate a compensable taking. Pursuant to RCFC
52(c), “[i]f a party has been fully heard on an issue during trial and the court finds
against the party on that issue, the court may enter judgment against the party on a
claim or defense that, under the controlling law, can be maintained or defeated only
with a favorable finding on that issue.” In resolving such a motion, “the judge, as the
sole trier of fact, may weigh the evidence and is not required to resolve all issues of
evidence and credibility in the plaintiff’s favor.” Persyn v. United States, 34 Fed. Cl. 187,
195 (1995), aff'd, 106 F.3d 424 (Fed. Cir. 1996) (citations omitted). Rather, after hearing
the plaintiff’s evidence, the Court “determine[s] whether or not the plaintiff has
convincingly shown a right to relief.” Fifth Third Bank of W. Ohio v. United States, 56 Fed.
Cl. 668, 683 (2003) (citing Howard Indus., Inc. v. United States, 115 F. Supp. 481, 485–86
(Ct. Cl. 1953)). “The trial may end at the close of a plaintiff’s case if a plaintiff has failed
to maintain its claim, RCFC 52(c), because ‘[a] plaintiff has no automatic right to cross-
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examine a defendant's witnesses for the purpose of proving what the plaintiff failed to
establish during the presentation of its case.’” Columbia First Bank, FSB v. United States,
60 Fed. Cl. 97, 101 (2004) (quoting Cooper v. United States, 37 Fed. Cl. 28, 35 (1996)).
“[T]he plaintiff has the burden to prove a taking occurred[.]” CCA Assocs. v.
United States, 667 F.3d 1239, 1245 (Fed. Cir. 2011); see also Loesch v. United States, 645 F.2d
905, 914 (Ct. Cl. 1981) (“[T]he burden of proof rests on plaintiffs, and not on the
defendant, to establish that a taking has occurred justifying the payment of just
compensation.” (citations omitted)). Plaintiffs have the burden of proving their case by
a preponderance of the evidence. Palm Beach Isles Assocs. v. United States, 58 Fed. Cl.
657, 665 (2003), aff’d, 122 F. App’x 517 (Fed. Cir. 2005).
IV. FIFTH AMENDMENT TAKINGS PRINCIPLES
The Takings Clause of the Fifth Amendment guarantees the payment of just
compensation when private property is “taken” for public use via inverse
condemnation, as alleged here. U.S. Const. amend. V. “It protects ‘private property’
without any distinction between different types.” Horne v. Dep't of Agric., 576 U.S. 350,
358 (2015) (noting that “[t]he principle reflected in the Clause goes back at least 800
years to Magna Carta, which specifically protected agricultural crops from
uncompensated takings” (citing W. McKechnie, Magna Carta, A Commentary on the
Great Charter of King John 329 (2d ed. 1914))). Inverse condemnation is “a shorthand
description of the manner in which a landowner recovers just compensation for a taking
of his property when condemnation proceedings have not been instituted.” United
States v. Clarke, 445 U.S. 253, 257 (1980). “It is a cause of action against the government
to recover the value of property taken by the government without formal exercise of the
power of eminent domain.” Moden v. United States, 404 F.3d 1335, 1342 (Fed. Cir. 2005)
(citing Clarke, 445 U.S. at 257).
“Takings claims typically come in two forms: per se or regulatory.” Alimanestianu
v. United States, 888 F.3d 1374, 1380 (Fed. Cir. 2018). A per se (or “categorical”) taking
occurs where there is a physical invasion or appropriation of property, whether real,
Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 427 (1982), or personal,
Horne v. Dep't of Agric., 576 U.S. at 352, 357. Such a “classic taking” is one “in which the
government directly appropriates private property for its own use.” Tahoe–Sierra Pres.
Council, Inc. v. Tahoe Reg’l Planning Agency, 535 U.S. 302, 324 (2002) (emphasis added)
(other alterations and internal quotation marks omitted). 15 In addition to per se (or
15“A permanent physical taking involves a ‘permanent physical occupation of property’ and is
treated as a per se taking for which the government must pay compensation regardless of the
circumstances.” Baley v. United States, 134 Fed. Cl. 619, 660 (2017) (quoting Loretto, 458 U.S. at
- 13 -
categorical) takings, the United States Supreme Court has recognized that where a
regulatory restriction “does not entirely deprive an owner of property rights,” Horne,
576 U.S. at 364, but nonetheless goes “too far,” id. at 360 (quoting Pa. Coal Co. v. Mahon,
260 U.S. 393 (1922)), it may result in a regulatory taking. 16 The Supreme Court also has
treated certain types of regulatory actions as categorical takings. For example, a
categorical taking occurs when regulations “compel the property owner to suffer a
physical invasion of his property” or prohibit “all economically beneficial or productive
use.” Lucas v. S.C. Coastal Council, 505 U.S. 1003, 1015 (1992) (internal quotation marks
omitted).
Thus, Supreme Court “precedents stake out two categories of regulatory action
that generally will be deemed per se takings for Fifth Amendment purposes.” Lingle v.
Chevron U.S.A. Inc., 544 U.S. 528, 537–40 (2005). The first category requiring the
payment of just compensation involves a case “where [the] government requires an
owner to suffer a permanent physical invasion of her property—however minor . . . .”
Id. (citing Loretto, 458 U.S. 419 (1982)). The “second categorical rule applies to
regulations that completely deprive an owner of ‘all economically beneficial us[e]’ of her
property.” Lingle, 544 U.S. at 537–40 (quoting Lucas, 505 U.S. at 1019 (emphasis in
original)).
Beyond those categories, however, the Supreme Court has not “develop[ed] any
‘set formula’ for determining when ‘justice and fairness’ require that economic injuries
caused by public action be compensated by the government, rather than remain
disproportionately concentrated on a few persons.” Penn Cent. Transp. Co. v. City of New
York, 438 U.S. 104, 124 (1978). Instead, the Court has relied on “ad hoc, factual inquiries
into the circumstances of each particular case.” Connolly v. Pension Benefit Guar. Corp.,
475 U.S. 211, 224 (1986) (citations omitted). In engaging in these ad hoc, factual
inquires, the Supreme Court has identified several factors used in determining whether
there has been a taking: (1) “[t]he economic impact of the regulation on the claimant”;
(2) “the extent to which the regulation has interfered with distinct investment-backed
expectations”; and (3) “the character of the government action.” Penn Cent. Transp. Co.,
438 U.S. at 124; accord Ruckelshaus v. Monsanto Co., 467 U.S. 986, 1005 (1984). In
requiring courts “to consider the ‘character of the government action,’ the Supreme
Court in Penn Central recognized government action may impact property in myriad
441), aff'd, 942 F.3d 1312 (Fed. Cir. 2019).
16Before the Supreme Court’s decision in Pennsylvania Coal, “the Takings Clause was
understood to provide protection only against a direct appropriation of property—personal or
real. Pennsylvania Coal expanded the protection of the Takings Clause, holding that
compensation was also required for a ‘regulatory taking’—a restriction on the use of property
that went ‘too far.’” Horne, 576 U.S. at 360 (citing and quoting Pa. Coal Co., 260 U.S. at 415).
- 14 -
ways and what is important is the nature or substance of the government’s action, as
opposed to the precise form it may take.” Dimare Fresh, Inc. v. United States, 808 F.3d
1301, 1307 (Fed. Cir. 2015) (quoting Penn Cent. Transp. Co., 438 U.S. at 124).
Four years after Penn Central, the Supreme Court, in Loretto v. Teleprompter
Manhattan CATV Corp., reaffirmed the rule that a physical appropriation of property
gives rise to a per se taking, without regard to other factors. See Horne v. Dep't of Agric.,
576 U.S. at 360 (discussing Loretto). In Loretto, the Court held that the installation of a
cable box on a small corner of Loretto’s rooftop was a per se taking, even though the
property owner could still sell and economically benefit from the property. Horne, 576
U.S. at 363 (discussing Loretto, 458 U.S. at 436). That was true without regard to the
claimed public benefit or the economic impact on the owner. The Court explained that
such protection was justified not only by history, but also because such an intentional,
physical “appropriation is perhaps the most serious form of invasion of an owner's
property interests,” depriving the owner of the “the rights to possess, use and dispose
of” the property in the manner in which the owner sees fit. Loretto, 458 U.S. at 435(internal quotation marks omitted). Thus, when there has been a physical
appropriation, courts ordinarily “do not ask . . . whether it deprives the owner of all
economically valuable use” of the item taken. Tahoe–Sierra, 535 U.S. at 323. In sum,
“[w]hen the government physically takes possession of an interest in property for some
public purpose, it has a categorical duty to compensate the . . . owner.” Id. at 322–23
(citing United States v. Pewee Coal Co., 341 U.S. 114, 115 (1951)); see also Lingle, 544 U.S. at537–40 (“The paradigmatic taking requiring just compensation is a direct government
appropriation or physical invasion of private property.”).
On the other hand, “[u]nlike takings cases concerning the physical appropriation
or government condemnation of property, the Supreme Court has abjured the
application of rigid rules in its regulatory takings analysis.” Dimare Fresh, 808 F.3d at
1307. Indeed, the Supreme Court has “emphasized that ‘most takings claims turn on
situation-specific factual inquiries,’ adding ‘that no magic formula enables a court to
judge, in every case, whether a given government interference with property is a
taking.’” Quebedeaux v. United States, 112 Fed. Cl. 317, 321 (2013) (quoting Ark. Game &
Fish Comm’n v. United States, 568 U.S. 23, 31–32 (2012)). Only “in rare instances” has the
Supreme Court “drawn some bright lines, giving, as examples, situations in which a
permanent physical occupation of property occurs or where regulations require a
property owner to sacrifice all economic benefit associated with its land.” Quebedeaux,
112 Fed. Cl. at 321 (citing Loretto, 458 U.S. at 426, and Lucas, 505 U.S. at 1019).17
17In all takings cases, the object of the inquiry is essentially the same; courts are tasked with
assessing how similar the governmental action is to a direct physical taking such that the
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Notwithstanding that physical takings are generally considered per se takings,
several types of indirect or temporary physical takings are subject to “situation-specific
factual inquiries,” Quebedeaux, 112 Fed. Cl. at 320–21, including alleged takings based
upon government-induced flooding and, by extension, chemical contamination. See
United States v. Cress, 243 U.S. 316, 328 (1917); Pumpelly v. Green Bay & Miss. Canal Co., 80
U.S. 166, 181 (1871) (recognizing that “where real estate is [ ] invaded by superinduced
additions of water . . . so as to effectually destroy or impair its usefulness, it is a taking,
within the meaning of the Constitution”). Flooding cases – despite the physical nature
of the alleged taking – clearly are not subject to any bright line tests. In Arkansas Game
& Fish Commission, for example, the Supreme Court reversed a decision from our
appellate court, the United States Court of Appeals for the Federal Circuit, in which the
latter held that a government-induced flooding, temporary in duration, gains an
automatic exemption from Takings Clause inspection. Ark. Game & Fish, 568 U.S. at 38.
“The Court rejected this bright-line rule because it viewed the determination of whether
a flood results in a takings as a case-specific, factual inquiry, emphasizing that
‘[f]looding cases, like other takings cases, should be assessed with reference to the
‘particular circumstances of each case,’ and not by resorting to blanket exclusionary
rules.’” Quebedeaux, 112 Fed. Cl. at 324 (quoting Ark. Game & Fish, 568 U.S. at 37(quoting United States v. Cent. Eureka Mining Co., 357 U.S. 155, 168 (1958))).
In Arkansas Game & Fish Commission, the Supreme Court identified several factors
for courts to consider in assessing whether there has been a taking, among them: (i) the
duration of the flooding; (ii) whether the invasion is intended or is the foreseeable result
of authorized government action; (iii) the character of the land at issue and the owner’s
“reasonable investment-backed expectations” regarding the land’s use; and (iv) the
severity of the interference. Ark. Game & Fish, 568 U.S. at 38–39. The reason for the
plaintiff should be compensated. The Supreme Court explained the basic theory in Lingle, 544
U.S. at 537–40:
Although our regulatory takings jurisprudence cannot be
characterized as unified, these three inquiries (reflected in Loretto,
Lucas, and Penn Central) share a common touchstone. Each aims to
identify regulatory actions that are functionally equivalent to the
classic taking in which government directly appropriates private
property or ousts the owner from his domain. Accordingly, each
of these tests focuses directly upon the severity of the burden that
government imposes upon private property rights. The Court has
held that physical takings require compensation because of the
unique burden they impose: A permanent physical invasion,
however minimal the economic cost it entails, eviscerates the
owner’s right to exclude others from entering and using her
property—perhaps the most fundamental of all property interests.
- 16 -
application of an ad hoc, multifactor test in flooding cases is that, as Loretto itself
recognized, “[n]ot every physical invasion is a taking.” 458 U.S. at 435 n.12 (emphasis in
original). “[T]he intermittent flooding [and other] cases reveal [that] such temporary
limitations are subject to a more complex balancing process to determine whether they
are a taking. The rationale is evident: they do not absolutely dispossess the owner of his
rights to use, and exclude others from, his property.” Id. (citing PruneYard Shopping
Center v. Robins, 447 U.S. 74 (1980), and Kaiser Aetna v. United States, 444 U.S. 164 (1979)).
Thus, it is hardly surprising that the “the multi-factor approach of Arkansas Game . . .
shares certain features of the Penn Central analysis.” Caquelin v. United States, 959 F.3d
1360, 1366, 1370 (Fed. Cir. 2020) (explaining that “[g]overnment-induced flooding
therefore comes within the rationale for more flexible takings standards” in
“recognition of ‘the nearly infinite variety of ways in which government actions or
regulations can affect property interests’” (quoting Ark. Game & Fish, 568 U.S. at 31)).
This Court also has recognized the similarity between flooding cases and
regulatory takings, with Senior Judge Bruggink insightfully observing that “flooding
cases have been treated as sui generis in takings analysis due to their similarity to tort
actions[.]” Banks v. United States, 138 Fed. Cl. 141, 147–48 (2018) (explaining that in Ark.
Game & Fish, 568 U.S. 38–40, “the Court viewed temporary physical takings as similar to
regulatory takings in that both involve a balancing of various factors to determine ‘the
existence vel non of a taking’” and that “[t]hese factors include time, foreseeability,
severity, the character of the land at issue and the owner’s reasonable expectations”).
A takings claim based on alleged chemical contamination of real property is
subject to a multifactor test similar to that employed in the flooding takings cases,18 as a
“plaintiff first must show that treatment under takings law [as opposed to tort law] is
appropriate.” Moden, 404 F.3d at 1342 (applying Ridge Line, Inc. v. United States, 346 F.3d
1346, 1355 (Fed. Cir. 2003)). The Federal Circuit explained the applicable test as follows:
First, [the plaintiff] must show either that the government
intended to invade a protected property interest or that the
asserted invasion is the direct, natural, or probable result of
an authorized activity and not the incidental or consequential
injury inflicted by the activity. Second, it must show that the
invasion appropriated a benefit to the government at the expense
of the property owner, at least by preempting the property
18Cf. Cary v. United States, 552 F.3d 1373, 1377, 1380 (Fed. Cir. 2009) (noting that Ridge Line’s
“language developed from the long history of the Supreme Court’s flooding cases” and
applying the test where “the government did not intend to take the landowners’ land by use of
an uncontrolled wildfire”).
- 17 -
owner’s right to enjoy its property for an extended period of
time, rather than merely by inflicting an injury that reduces the
property’s value. If treatment under takings law is appropriate,
the inverse-condemnation plaintiff must then “show that it
possessed a protectable property interest in what it alleges the
government has taken.”
Moden, 404 F.3d at 1342 (emphasis added) (internal citations omitted) (citing and
quoting Ridge Line, 346 F.3d at 1355).
With these principles in mind, the Court turns to analyzing the evidence the
Pennas presented at trial.
V. THE COURT GRANTS THE GOVERNMENT’S RCFC 52(C) MOTION
The Court concludes that the evidence the Pennas presented at trial, at best,
sketches out a possible tort, but falls far short of proving a compensable Fifth
Amendment takings claim pursuant to the Federal Circuit’s Moden and Ridge Line tests,
which articulate the applicable legal standard for recovery in this case. Moreover, even
if the Pennas had demonstrated a taking of some sort of property right, their case
entirely flounders on the issue of damages (i.e., just compensation). Indep. Park
Apartments v. United States, 465 F.3d 1308, 1311 (Fed. Cir. 2006) (acknowledging “the
rule that takings damages are limited to just compensation for what was taken and do
not encompass consequential damages” (citing City of Monterey v. Del Monte Dunes at
Monterey, Ltd., 526 U.S. 687, 711 (1999), and Yuba Natural Res., Inc. v. United States, 904
F.2d 1577, 1581 (Fed. Cir. 1990))).
A. The Pennas Failed To Prove A Compensable Taking
Before applying law to fact, we briefly summarize once again the nature of the
Pennas’ central, if not only, claim. It is straightforward. The Pennas assert that the
government “improperly disposed of contaminants and hazardous substances” that
“have invaded and contaminated Plaintiffs’ property.” Compl. ¶ 6. The contamination,
allege the Pennas, has “left . . . their property virtually valueless.” Id. ¶¶ 18, 27 (“The
contamination of Plaintiffs’ property and water supply has caused permanent and
irreparable damage to Plaintiffs’ property to the point where their property is virtually
valueless and, therefore, amounts to a taking without just compensation.”); 33.a
(requesting judgment of “[c]ompensation in an amount greater than $1,000,000.00 be
awarded to Plaintiffs for the taking of their property”). To be clear, the Pennas’
complaint itself focuses only upon the Property as a whole and asserts that the
government effectively has taken the Property’s entire value. In particular, the Pennas
- 18 -
assert that “[b]ecause the property is permanently contaminated, not eligible for a
mortgage, and there are no comparable sales of contaminated properties, it has no
market value.” Pl. Memo. ¶ 113.
A perennial problem in takings cases – as highlighted in the Court’s summary of
takings law, supra – is selecting the appropriate legal lens for analyzing the claims and
facts at issue in a particular matter. In that regard, “[b]oth the federal district courts and
[this Court] have struggled throughout the years to establish and appropriately apply a
test to distinguish torts brought against the United States from constitutional takings.”
Alexandra K. McLain, Choose Your Path to Recovery Against the United States: Torts v.
Takings, 22 Lewis & Clark L. Rev. 1063, 1064, 1066 (2018) (“Because takings
jurisprudence is somewhat dependent on the basic elements of tort law, drawing the
line between takings and torts has caused a great deal of confusion in the courts.”
(footnotes omitted)); see also Hansen v. United States, 65 Fed. Cl. 76, 79 (2005) (“One issue
that has over the decades divided this court is the distinction between torts and takings
under the Takings Clause of the Fifth Amendment. The distinction is important
because this court has jurisdiction over taking claims under the Tucker Act, but not over
tort actions.” (footnotes omitted)). In Hansen, this Court provided a lengthy, scholarly
review as part of its critique of the state of takings law:
Despite the Serbonian Bog into which the takings
jurisprudence of this court has fallen, the historical origin and
application of the basic principles of takings jurisprudence
reveal that there is no clear cut distinction between torts and
takings. The best that can be said is that not all torts are
takings, but that all takings by physical invasion have their
origin in tort law and are types of governmental nuisances or,
at times, trespasses.
65 Fed. Cl. at 80. While Hansen concluded that “resort[ing] to the historic development
of takings jurisprudence is . . . essential to resolving the conundrum facing the court[,]”
id. at 80, we may dispense with any further historical review here because the Federal
Circuit has provided us with clear direction in Ridge Line and Moden, both of which
reflect the Supreme Court’s approach in flooding cases: they are not treated as per se
physical takings. Hansen, 65 Fed. Cl. at 97 (noting that “[i]n Ridge Line, the Federal
Circuit neatly summarized the tort-taking distinction test”). 19
19 Whether we have since escaped from the proverbial bog in some narrow respect or sunken
deeper into it is a question we leave for the Federal Circuit and the Supreme Court. See Bridge
Aina Le’a, LLC v. Hawaii Land Use Comm’n, 141 S. Ct. 731 (2021) (Thomas, J., dissenting from denial
of certiorari) (critiquing the Supreme Court’s regulatory takings jurisprudence on the grounds
- 19 -
Like the plaintiffs in Moden, the Pennas “do not attempt to show that the
government actually intended to invade a protected property interest.” Moden, 404 at
1342 (emphasis added). Accordingly, the Pennas must show: (1) “that the asserted
invasion is the direct, natural, or probable result of an authorized activity and not the
incidental or consequential injury inflicted by the activity”; and (2) “that the invasion
appropriated a benefit to the government at the expense of the property owner, at least
by preempting the property owner’s right to enjoy its property for an extended period of time,
rather than merely by inflicting an injury that reduces the property’s value.” Id.(emphasis added).20
In Moden, the Federal Circuit concluded that because there was “no genuine
issue of material fact either that the government intended to contaminate the Modens’
ranch or that the contamination of the Modens’ ranch [was] the direct, natural, or
probable result of the authorized use” of the chemical at issue, the court found “it
unnecessary to address whether the contamination of the Modens’ ranch preempted the
Modens’ right to enjoy their property for an extended period of time, rather than merely
by inflicting an injury that reduces its value.” 404 F.3d at 1346. The Federal Circuit
similarly found “it unnecessary to address whether the Modens possessed a protectable
property interest in what they allege the government has taken.” Id.In this case, the Court takes the opposite approach. We find it unnecessary to
decide the various questions of foreseeability and causation, 21 but rather conclude that,
based upon the evidence presented at trial, the Pennas failed to demonstrate that the
government either appropriated a benefit at their expense or inflicted any concrete
that “nobody—not States, not property owners, not courts, nor juries—has any idea how to
apply this standardless standard”). Justice Thomas continued: “These starkly different
outcomes based on the application of the same law indicate that we have still not provided
courts with a ‘workable standard.’ . . . A know-it-when-you-see-it test is no good if one court
sees it and another does not.” Id. at 731–32.
20These elements – adapted from Ridge Line – “set out a two part test that can be characterized
as causation and appropriation.” Cary, 552 F.3d at 1376–77.
21“[P]roof of causation, while necessary, is not sufficient for liability in an inverse
condemnation case . . . In addition to causation, an inverse condemnation plaintiff must prove
that the government should have predicted or foreseen the resulting injury.” Moden, 404 F.3d at
1343.
- 20 -
injury or quantifiable harm in terms of their use of the Property or its value. 22 Thus,
“treatment under takings law” is unwarranted here. Ridge Line, 346 F.3d at 1355.23
For instance, in Ridge Line, the government effectively “shifted some of its storm
water control costs to Ridge Line.” 346 F.3d at 1358. “By covering much of its land with
impervious surfaces but failing to build water retention facilities, the government . . .
forced Ridge Line to build larger, more expensive control facilities in South Hollow
than would otherwise have been necessary.” Id. In other words, the government in
that case not only avoided certain costs, but effectively transferred them to the plaintiff
property owner. The Pennas advance a similar contention, arguing that the
government appropriated a benefit at the Pennas’ expense by using their Property as a
“receptacle for untreated AFFF wastewater,” rather than “incur[ring] the time and
expense to handle [the] AFFF properly.” Pl. Resp. at 8. The Pennas presented no
evidence, however, supporting the claim that the government imposed any costs on
them due to AFFF contamination. Indeed, the Pennas have not presented any evidence
that the government was required to dispose of AFFF (at the time of its use) in any
particular manner, as the chemicals at issue were not, and are not, identified or
regulated as hazardous by CERCLA, RCRA, or Pennsylvania’s HSCA. See JX 42 at
US00066429; Giovanni, 433 F. Supp. at 746 (holding that PFOS and PFOA do not
constitute hazardous substances under Pennsylvania’s HSCA). Nor did the Pennas
present any evidence regarding the necessity, requirement, or the cost of any
remediation of the contamination of their Property.
At a minimum, the Pennas must demonstrate that the government interfered
with their use and enjoyment of the Property in such a way as to effectuate a taking. See
Taylor v. United States, 959 F.3d 1081, 1090 (Fed. Cir. 2020) (considering whether
overhead flights “directly, immediately, and substantially interfered with the claimant’s
enjoyment and use of the land” (emphasis added) (citing Brown v. United States, 73 F.3d
22 This appropriation prong, as explained at length supra, “developed from the long history of
the Supreme Court's flooding cases.” Cary, 552 F.3d at 1380–81 (citing cases and explaining that
“[t]o satisfy the appropriation requirement, the preemption must be sufficiently permanent that
it can be said that the government has exercised dominion over the property”); see also Sandra B.
Zellmer, Takings, Torts, and Background Principles, 52 Wake Forest L. Rev. 193, 205 (2017) (“Cases
where temporary invasion or damage to private property results from a government action, but
where the government had no actual intent to damage the property, much less to occupy it,
pose the greatest difficulties for courts attempting to distinguish between a tort and a taking.
Damages caused by flooding often fall within this legal purgatory.”).
23See Hansen, 65 Fed. Cl. at 101 (“The real key to the distinction between mere torts . . . and
takings by the government is the substantiality of the harm, not the nature of the actions leading
to that harm. . . . [O]ne can imagine a theoretical continuum on which torts become takings
when a certain threshold of substantial interference with property is reached.”).
- 21 -
1100, 1102 (Fed. Cir. 1996))); Ridge Line, 346 F.3d 1346 at 1357 (examining “whether the
government’s interference with any property rights . . . was substantial and frequent
enough to rise to the level of a taking” (emphasis added)); cf. Argent v. United States, 124
F.3d 1277, 1284 (Fed. Cir. 1997) (holding that when “plaintiffs complain of a peculiarly
burdensome pattern of activity . . . that significantly impairs their use and enjoyment of
their land, those plaintiffs may state a cause of action [for inverse condemnation]”). The
Pennas have not done so.
The Pennas provide no evidence for their contention that the government
substantially interfered with their use of their Property, and Mr. Penna’s own testimony
undermines any such assertion. For example, while the Pennas alleged that their water
supply “came entirely” from their well, which was used “for all domestic purposes”
until the AFFF contamination was discovered in 2014, see Compl. ¶¶ 20–21, the
evidence is clear that the Property was connected to public water by 2010 to address a
water pressure issue, and not due to AFFF contamination concerns. Tr. 215:11–216:6;
Tr. 197:21–198:7. Moreover, Mr. Penna acknowledged that even after receiving
sampling results from the private well, which indicated elevated levels of PFOA and
PFOS, the Pennas continued to use their well to water plants on the Property and to
wash their vehicles, just as they had done before. Tr. 232:6–233:12. Mr. Penna’s
business, operated from his garage, was similarly unaffected, as he continued to use the
garage for his business and home office even after receiving testing results in October
2014. Tr. 231:21–232:5. Although the Pennas contend that the PFOS levels in the surface
water constitute a loss of usefulness of the Property, they also acknowledge that they do
not use the surface water, and they do not otherwise prove how contaminated surface
water substantially impairs their use of the Property or its value. See Pl. Resp. at 10.
Moreover, the Pennas in their pretrial memorandum raised a concern about their
inability to subdivide the Property, Pl. Memo. ¶ 109, but they never demonstrate that
the contamination caused or created any obstacle to subdividing their Property. Tr.
205:1-13. Accordingly, the Pennas’ assertion that their Property could not “be
subdivided to construct town homes” because “it was impossible without getting a
clean environmental bill of health” is not supported by any objective, documentary
evidence. Pl. Memo. ¶ 109.
The Pennas’ further assertion that “[a]n offer to purchase the Property for
$746,000 was made, contingent on a $475,000 mortgage, and was then withdrawn” is
false. Id. ¶ 110. As detailed above, the offer made to the Pennas was for $725,000, not
$746,000, and it was not withdrawn but rather lapsed when the Pennas did not accept it
in a timely fashion. The failed transaction had nothing to do with environmental
problems, Stip. ¶ 31, and there is no evidence that it fell through because of the inability
- 22 -
of the would-be buyers to obtain a mortgage. 24 To the contrary, the Pennas’ real estate
agent urged the Pennas to “return [the] completed paperwork asap” because “[a]s you
know timing is very important[.]” DX 324. If anything, then, the evidence suggests that
the Pennas’ failure to accept the offer in a timely manner – even if that would have
required some sort of environmental disclosure, see id. – was the cause of the transaction
not proceeding. To the extent Plaintiffs generally had trouble selling the Property, that
is more explainable by Mr. Cuker’s admission that “[o]bviously, there were other issues
with the property, which have been brought out. There was a zoning issue; there was a
title issue.” Tr. 295:16–19.
In any event, as noted supra, the Pennas’ case – both as a legal and evidentiary
matter – “focused on loss of value [of the Property].” Tr. 229:16-18 (Plaintiff’s counsel,
Mr. Cuker, noting that other alleged impacts to the Property or the Pennas’ use of it
“are ancillary things that don’t go to the core of the case”). In particular, the Pennas’
central thesis is that because “potential buyers can’t obtain financing, the property can’t
be sold. The property is not marketable if it’s not mortgageable.” Tr. 29:1-3 (Mr.
Cuker’s argument). Mr. Cuker conceded,25 however, that Pennsylvania law does not
preclude the Property from being sold even in its allegedly contaminated state. Tr.
29:10. Moreover, neither the Pennas themselves nor their experts provided any credible
testimony to establish that the Property is not mortgageable, unsellable, or otherwise
valueless. The Pennas’ own appraisal expert, Mr. Hosey, conceded that “none of the
improvements to the Penna property lost their utility in the as-contaminated scenario.”
Tr. 520:13–25. While Mr. Penna testified that the family stopped gardening on the
Property and stopped drinking the well water due to AFFF contamination, see Tr. 201:6–
15, Mr. Cuker conceded that he did not “think the mere inability to garden, by itself,
would rise to the level of a taking.” Tr. 229:19–230:3. The Pennas may have made the
personal decision – out of an abundance caution – to cease gardening on the Property
due to concerns with surface or well water contamination, but there is little evidence
supporting the necessity of that choice; in fact, the EPA specifically found that PFOS
24The Pennas similarly assert that they “have not attempted to rent their house out for domestic
use, because they are concerned that it is not safe for children to play in the backyard, or for the
owners to plant vegetables in the garden or drink from the well that services the garage.” Pl.
Memo. ¶ 111. The Pennas make no attempt to reconcile that purported reluctance with their
attempt to sell the Property, nor do they – or any of their expert witnesses – attempt to explain
the relevance of this putative fact to their overall theory of the taking here: that the
contamination rendered the Property not mortgageable and thus valueless.
25See Minter v. Wells Fargo Bank, N.A., 762 F.3d 339, 347 (4th Cir. 2014) (“‘[A] lawyer's statements
may constitute a binding admission of a party[ ]’ if the statements ar e ‘deliberate, clear, and
unambiguous[.]’” (quoting Fraternal Order of Police Lodge No. 89 v. Prince George's Cty., Md., 608
F.3d 183, 190 (4th Cir. 2010))).
- 23 -
and PFOA were unlikely to be taken up by plant roots. DX 273. That is not to say that
the Court questions the Pennas’ sincerity of concern or prudence, but their well-
intentioned precaution alone does not support a takings claim. Further, with respect to
the well water, specifically, the Navy effectively remediated any issue by providing
bottled water to the Penna Property following the notice of AFFF contamination. Tr.
203:4–6. Indeed, one of Plaintiffs’ exhibits admitted into evidence at trial indicates that
while the Pennas’ “well water is not to be used for drinking or cooking purposes[,]”
they are “already hooked up to public water” and thus “no further action is required.”
PX 85 (March 13, 2015 letter from Navy to Mr. Penna). 26 And in opposing the
government’s pending RCFC 52(c) motion, rather than supporting with evidence their
sweeping allegation that contamination interfered with their use of the Property, the
Pennas merely posed a string of rhetorical questions regarding the speculative concerns
a hypothetical buyer might have in purchasing a contaminated property. 27 See Pl. Resp.
at 10. Such rhetorical questions do not constitute evidence.
The Pennas’ experts also provided no credible testimony that contamination
substantially interfered with the Pennas’ use of their Property. Tr. 520:9–25. Indeed,
Mr. Cammarata, one the Pennas’ expert witnesses, testified that “heightened anxiety is
the only reason why [he] feel[s] that PFOS and PFOA impair[] the use or enjoyment of
the Penna property[.]” Tr. 375:12-15 (emphasis added). Mr. Cammarata is not a
medical doctor or a psychologist and, further, he admitted that at least one mortgage
regulator has never “associated anxiety as being incompatible with enjoyment of the
property.” Tr. 376:2-5. There is no evidence that any bank or regulator examines a
property owner’s anxiety when determining whether a property may be mortgageable.
In any event, Mr. Cammarata did not examine the effects of an owner’s anxiety on
property value, a cause-and-effect that, if asserted, is dubious on its face. In that regard,
Mr. Cammarata admitted that “the Penna property can be used for residential purposes
26See also PX 57 (June 9, 2016 Letter from Horsham Township Council) (“All water proved by
[Horsham Water and Sewer Authority] meets or exceeds all state and federal drinking water
quality standards, and all nine of our active wells in Horsham show PFC levels significantly
below the new EPA . . . [a]dvisory.”).
27Under the heading “Plaintiffs Presented Evidence of Loss of Usefulness,” the Pennas cite no
substantive evidence whatsoever from the record, instead simply posing the following
questions: “The Government dismisses [the PFOS contamination levels in the surface water] by
saying that the Pennas do not use surface water. . . . True, but how would a prospective
purchaser or renter with minor children feel about living on a property with standing water
contaminated above the human health screening level? And what lender would accept a
property with such contamination as collateral for a mortgage?” Pl. Resp. at 10. If anything, the
suggested answers to those very questions are what the Pennas were required to, but did not,
prove.
- 24 -
despite the presence of PFOS and PFOA[,]” which of course is more consistent, if
anything, with the government’s view that the Property is marketable. Tr. 376:10-14.
Mr. Cammarata ultimately concluded that because the Penna Property was
contaminated by an immitigable hazard, it was not eligible for a mortgage. Tr. 364:1 –4.
Notably, however, Mr. Cammarata conceded that he did not investigate whether PFOS
or PFOA were present in properties near the Penna Property, nor did he know whether
the owners of other properties impacted with PFOS or PFOA were nevertheless able to
obtain a mortgage. Tr. 372:6–13. He conceded that he could not identify any loan for a
single-family residence anywhere in the United States that was denied a mortgage
because of the presence of PFOS or PFOA. Tr. 379:1–6, 382:18–22, 386:16–19, 390:12–16.
On cross-examination, the government showed Mr. Cammarata a list of
properties (near the Penna Property) that had been sold despite PFOA and PFOS
contamination. Tr. 398:24–399:16; PX 131 (Slide 26 of Mr. Hosey’s direct testimony).28
Mr. Cammarata conceded that, at the time he wrote his report, he had not been aware of
the transactions. Tr. 409:18–23. Furthermore, he was unaware to what extent those
properties were contaminated with PFOA and PFOS. Tr. 410:6-10. Mr. Cammarata
attempted to distinguish the Penna Property from the properties for which buyers or
owners were able to secure mortgages (despite notice of elevated PFOS and PFOA
levels in their private wells) by opining that “public water would completely resolve
that problem.” Tr. 399:17–400:8. But, that fact would not distinguish other nearby
properties from the Penna Property insofar as the latter has been connected to public
water since 2010. Tr. 197:24–198:7. Mr. Cammarata also attempted to distinguish the
comparable properties from the Penna Property on the grounds that the Penna Property
has both a contaminated well and contaminated soil. Tr. 402:24–403:10. Mr. Cammarata
conceded, however, that he had no knowledge of whether the nearby properties had
contaminated soil in addition to contaminated wells. Tr. 410:6–10. Particularly in light
of the comparable properties which clearly are mortgage eligible, see PX 131 (Slide 26 of
Mr. Hosey’s direct testimony), the Court rejects Mr. Cammarata’s conclusion that the
Penna Property is not mortgageable due to contamination.
The Court finds that Mr. Cammarata made further concessions and admissions
on cross-examination that devastated the credibility and reliability of his opinion. For
example, he admitted that:
• he performed no analysis of FHA, VA, Fannie Mae, or Freddie Mac
transactions involving land impacted with PFOS or PFOA (Tr. 372:1-5);
28 See Tr. 597:4-8 (admitting Mr. Hosey’s presentation into evidence).
- 25 -
• there is no VA document “stating that the VA considers the presence of
PFOS or PFOA a hazard under its regs” (Tr. 378:2-6);
• he “did not reach a conclusion as to whether there was no comparable
market data available” nor did he make an “attempt to identify sales of
properties affected by PFOS and PFOA” (Tr. 385:4-9);
• he does not have an opinion “on the degree to which an environmental
hazard affects the value of the property” (Tr. 391:20-23); and
• he did not appraise the Penna Property (Tr. 391:24-392:1).
Finally, Mr. Cammarata agreed that even if an appraiser were to determine that
there is a hazardous condition on a property, “the person applying for the mortgage . . .
can demonstrate that it’s not a hazard or not something that the . . . issuing bank should
be concerned about” and then the bank “has the flexibility to make that decision and
proceed with the loan anyhow.” Tr. 415:13-21. This admission further undermines
Mr. Cammarata’s opinion that a buyer cannot obtain a mortgage to purchase the Penna
Property. And even assuming that the contamination at issue would make the
mortgage process more difficult, Mr. Cammarata did not assess the relative effect of the
contamination versus the liens and other encumbrances impacting the Property. 29
The Court finds that Mr. Hosey’s testimony was equally inconsistent and
unreliable as Mr. Cammarata’s. Despite testifying as an appraisal expert in this matter,
Mr. Hosey admitted that he did not have experience appraising property with PFOA or
PFOS contamination. Tr. 466:7–12. Although Mr. Hosey described in depth the effect of
stigma on property generally – presumably to bolster the Pennas’ claim that they were
entitled “to compensation not only for the physical taking, but for diminution in value
due to stigma associated with contaminated property,” see Pl. Memo. at 61 – Mr. Hosey
readily conceded that he did not analyze the impact of environmental stigma (resulting
from PFOS or PFOA contamination) on the Penna Property. Tr. 467:22–468:7 (admitting
that he “did not monetize any stigma impact relation to the presence of PFOS or PFOA
on the Pennas’ property”). To be clear, Mr. Hosey rendered no opinion on whether
stigma impacts the Penna Property or, if so, what the financial impact may be.30 Finally,
29See Cent. R. Co. of New Jersey v. Cent. Hanover Bank & Tr. Co., 29 F. Supp. 826, 828 (S.D.N.Y.
1939) (noting that a property’s “actual value has been practically destroyed by the tax liens now
on them”); Resol. Tr. Corp. v. Cosgrove, 2001 WL 64777, at *4 (E.D. Pa. Jan. 24, 2001) (noting that
“tax liens on Deb–Mar's property . . . in turn made it difficult to sell Deb–Mar's assets”); cf.
Connecticut v. Doehr, 501 U.S. 1, 11–12 (1991) (noting that “attachments, liens, and similar
encumbrances” constitute “partial impairments to property rights”).
30 The Court reiterates that despite the Pennas’ having argued that they are entitled “to
- 26 -
and just like Mr. Cammarata, Mr. Hosey was “unable to identify any property in the
United States that was denied a mortgage because of PFOS or PFOA,” or “that did not
sell because of PFOS or PFOA.” Tr. 535:17–23.
Additionally, the government successfully undercut Mr. Hosey’s valuation
approaches by showing that his methods contradicted or ignored many of the basic
appraisal principles he had described. See, e.g., Tr. 515:2-9; Tr. 522:22–526:4; Def. 52(c)
Mot. at 26–32. For example, Mr. Hosey primarily used the sales comparison approach
for his before-contamination valuation of the Property. Tr. 492:7–12. Mr. Hosey
conceded that while “[t]he sales comparison approach typically includes techniques
such as pairing, case studies, and regression analysis, which support a percent
deduction to the unimpaired subject value,” he had not analyzed environmental case
studies in determining his after-contamination valuation for the Penna Property, nor
did he perform any kind of regression analysis or a paired sales analysis for the after-
contamination valuation. Tr. 526:12–527:7. Mr. Hosey also admitted that he did not
calculate the independent, negative impact of the recurring flooding on the value of the
Property. Tr. 580:2–18.
Mr. Hosey also failed to distinguish the Penna Property from the comparable
properties that sold for consideration after the Navy issued a notice of contamination
(notably, properties that the government identified, but that Mr. Hosey failed to assess
as part of his appraisal). 31 Tr. 464:20–465:11. Mr. Hosey insisted that while “there
[were] sales of properties that were contaminated and then moved to a public water
system,” in those cases “their contamination was cured, not ongoing like the Pennas.”
Tr. 464:20–23. He further explained that a cash buyer likely would not purchase the
Penna Property and that there was no way to adequately remediate the contamination.
Tr. 464:7–9, 13–15. As discussed, supra, the Penna Property was in fact connected to
public water and thus “cured” of any contamination, according to Mr. Hosey’s own
standard. Furthermore, there is no evidence that the Penna Property requires any
additional remediation, let alone any attempt by the Pennas to quantify the cost of such
remediation; Mr. Hosey simply did not compute or otherwise account for any cost to
cure the contamination. While he opined “that there is no cure for the contamination on
compensation not only for the physical taking [of their Property], but for diminution in value
due to stigma associated with contaminated property,” Pl. Memo. at 61, the Pennas presented
no evidence at trial to substantiate any “diminution in value due to stigma.”
31The government identified ten nearby properties that sold for consideration ranging between
$212,000 and $620,000 despite PFOA and PFOS contamination. Tr. 549:20–550:7; PX 131 (Slide
26 of Mr. Hosey’s direct testimony). Mr. Hosey acknowledged that he had not located those
properties during his appraisal and instead had been shown them for the first time at his
deposition. Tr. 544:23–545:13.
- 27 -
the Penna property” because “[t]he Pennas have no control over the contamination[,]”
Tr. 516:11-15 – a point which may well qualify as a non-sequitur – Mr. Hosey is not an
environmental engineer, a hydrologist, or a toxicologist. Tr. 516:16-19. Accordingly, the
Court concludes that Mr. Hosey cannot render an opinion on the need for a cure or
remediation, the feasibility of any cure or remediation, or any associated probable costs.
Tr. 519:14-17 (admitting in any event that he does “not present remediation costs in [his]
appraisal of the Penna property”). 32
Mr. Hosey also sought to distinguish the comparable properties the government
identified by claiming that “[n]one of [those] other properties have contaminated
tributaries that run through the property and overflow their banks with every heavy
rain [or] . . . have soil with documented contamination.” Tr. 465:2–5. But Mr. Hosey
ultimately conceded that, despite his bald assertion, he was unaware of whether the
other nearby properties in fact had contaminated soil or flooded in heavy rain. Tr.
551:15–21. Again, Mr. Hosey is not an expert in hydrology, mortgage regulations, or in
conducting or reviewing appraisals of property with PFOS or PFOA. Tr. 466:7 -17.
Perhaps Mr. Hosey’s most critical concession, however, was that “under the highest and
best use criteria, residential use of the Penna property in the after [contamination]
scenario was still legally permissible” and “physically possible[.]” Tr. 507:7 -14.33
In the end, the most damaging blow to Mr. Cammarata’s and Mr. Hosey’s
respective opinions is the fact that they are all but circular: the bottom line of each
expert rests to a significant extent on the uncritical, wholesale acceptance of the other’s
conclusion. Def. Mot. at 14-15. Mr. Cammarata’s testimony is that the Penna Property
“is not an eligible, mortgageable property.” Tr. 364:1-3. But, Mr. Cammarata “does not
opine on the ability to sell a nonmortgageable property[.]” Tr. 391:17-19; PX 130 (“I will
let a qualified appraiser comment on the market value and the ability to sell a
nonmortgageable property.”). The Pennas relied upon Mr. Hosey to fill in the gap; he
testified that “[t]he saleability and the market value of a non-mortgageable property is
very questionable . . . .” Tr. 463:14-17. Mr. Hosey admitted, however, that he based his
32 Mr. Hosey’s conclusion, in that regard, is inconsistent with that of Mr. Cammarata, who, in
reliance upon Mr. Mulhall, concludes only that “it may not be possible to remove these
compounds in the environment beneath and surrounding the Penna property . . . .” PX 130 at 6
(italics added, bold in original). Such speculative musings are an insufficient basis for the Court
to conclude that any contamination cannot be remediated, even assuming such r emediation
were required for health, safety, or by law.
33 Although Mr. Hosey during trial denied that the “residential use of the Penna property was
still an economic use in the after [contamination] scenario,” Tr. 507:15–24, counsel for the
government impeached the witness by pointing to his deposition testimony in which he
admitted that residential use was an “economically profitable . . . use of the land.” Tr. 508:2–11.
- 28 -
“ultimate conclusion of zero market value on Mr. Cammarata’s mortgagability
conclusion[.]” Tr. 510:8-12; see also Tr. 510:13-19; PX 131 at 23. In that regard, Mr. Hosey
admitted in his deposition – which the government employed at trial for impeachment
purposes – that (1) “Mr. Cammarata’s report, in and of itself, included a zero valuation,
and [Mr. Hosey] adopted that conclusion” (Tr. 510:20-511:5), and (2) Mr. Hosey “made
no attempt to verify Mr. Cammarata’s conclusion that the Penna property had no
market value or saleability[.]” Tr. 511:6-11; see also Tr. 513:6-11 (Mr. Hosey conceding
that “there was nothing in [his] report that would tell the reader that [he] based [his]
opinion of lack of saleability and lack of marketability on [his] experience”). 34 But Mr.
Cammarata never opined on market value. PX 130. Mr. Cammarata thus relies upon
Mr. Hosey’s testimony that the property cannot be appraised (due to contamination) in
order to conclude that the property is not mortgageable, while Mr. Hosey relies upon
Mr. Cammarata’s testimony that the Penna Property is not mortgageable in concluding
that the Property is not sellable and therefore valueless.35 Accordingly, the Court
concludes that Mr. Cammarata’s and Mr. Hosey’s testimonies – both individually and
collectively – fall far short of proving the Pennas’ case.
The Pennas’ own actions with regard to the prospective sale of their Property
further undermine Mr. Penna’s assertion that the Property, in its contaminated state, is
worth “zero.” Tr. 208:17–21. Although Mr. Penna opined that the Penna Property is
“not worth anything today,” id., the Court rejects his assessment. Indeed, on August 23,
2018, the Pennas received an offer to purchase the Property for $725,000 – an offer
which they did not accept in a timely manner and, thus, allowed to lapse. While we do
not know whether the sale would have closed if the Pennas had accepted the offer in a
timely manner, the Pennas – during the pendency of this case, in which they claim their
Property is worthless – actually returned a counteroffer to the potential buyer that was
34Additionally, Mr. Hosey references several of Mr. Cammarata’s putative conclusions that the
latter denies having reached. Compare, e.g., Tr. 535:7–16 (Mr. Hosey’s testimony that Mr.
Cammarata reached all of the points listed on Mr. Hosey’s slide 22), PX 131 (Slide 22 of Mr.
Hosey’s direct testimony) (listing six conclusions, including the statement that “[d]espite a
diligent search of the market, I was not able to discover a comparable sale or listing after
contamination”), with Tr. 392:4–6 (Mr. Cammarata’s admission that he did not research
comparable sales for the Penna Property). Thus, the Court agrees that “[t]o the extent that Mr.
Hosey’s analysis incorporates these phantom Cammarata conclusions as a factual predicate or
valid assumption, Mr. Hosey’s opinion is unreliable.” Def. 52(c) Mot. at 15.
35The Pennas cite Apple Inc. v. Motorola Inc., 757 F.3d 1286, 1320–1322 (Fed. Cir. 2014), to defend
Mr. Hosey’s and Mr. Cammarata’s reliance upon one another in reaching their conclusions. Pl.
Resp. at 25. Apple, however, referenced only the truism that one expert may rely on another
“for expertise outside of [his] field.” Id. at 1321. The court did not condone circular expert
testimony devoid of independent analysis in which each expert simply relies on the opinions of
the other as a predicate for his own conclusions.
- 29 -
more than $20,000 higher than the prospective buyer’s offer. Stip. at ¶ 21. While “[i]t is
the general rule that evidence of specific offers of purchase is not admissible for the
purpose of establishing the reasonable market value of property,” United States v.
Regents of N. M. Sch. of Mines, 185 F.2d 389, 391 (10th Cir. 1950), “[i]t is well settled that
an offer to sell property at a certain price may be proved against the owner as an
admission of its value at or near the time of the offer.” Erceg v. Fairbanks Expl. Co, 95
F.2d 850, 854 (9th Cir. 1938) (citations omitted). And even if the rejected purchase offer
of $725,000 and the subsequent counteroffer do not definitively prove the Property’s
value, they are probative of what the Pennas believed their Property was worth. Put yet
differently, had the Pennas truly believed that the Property had been rendered
worthless, they would have jumped at the $725,000 offer and not allowed it to lapse.
That the Pennas allowed the offer to expire – and, indeed, returned a higher counteroffer
to the prospective buyers – demonstrates, at the very least, that not even the Pennas
actually believed their Property is worthless.
The Pennas primarily rely on Sharp v. United States, 191 U.S. 341 (1903), for the
proposition that unaccepted offers are not admissible to prove market value. Pl. Resp.
at 22–23. The reasoning underlying the Supreme Court’s decision in Sharp is inapposite.
In Sharp, the Court emphasized the fact that an offer was, “at most, a species of indirect
evidence of the opinion of the person making such offer as to the value of the land.” Id. at
348 (emphasis added). The Court thus rejected an unaccepted offer as “too uncertain,
shadowy, and speculative to form any solid foundation for determining the value of the
land.” Id. at 348–49. The circumstances surrounding the offer to purchase the Penna
Property, however, do not suffer from the same deficiencies. In fact, the Pennas
themselves employed the purchase offer as an exhibit, rather than objecting to its
admissibility as the party opposing admissibility apparently did in Sharp. Accordingly,
the Pennas have waived any objection to the admissibility of the offer. See Def. Rep. at
20 (“[T]here are no questions of admissibility here, as the parties jointly prepared and
filed the stipulation, and all of its referenced documents are already part of the factual
record.”). The Court thus concurs with the government that the Court may consider
those documents “probative of whether Plaintiffs have met their burden of showing
that the property is ‘virtually valueless,’ and specifically may consider it probative of
the truthfulness of Mr. Penna’s testimony and the credibly of Mr. Hosey’s analysis . . . .”
Id. at 21.
Even if the Pennas had not waived such an admissibility objection, however, the
offer would be admissible in any event in the instant case. In that regard, Sharp
recognized that, depending upon the circumstances, a purchase offer may be
admissible. Id. at 349 (“To be of the slightest value as evidence in any court, an offer
must, of course, be an honest offer, made by an individual capable of forming a fair and
- 30 -
intelligent judgment, really desirous of purchasing, entirely able to do so, and to give
the amount of money mentioned in the offer, for otherwise the offer would be but a
vain thing.”); see also Nat'l Exch. Bank & Tr. Tr. for Fife Fam. Tr. A v. Petro-Chem. Sys., Inc.,
2013 WL 12180537, at *7 (E.D. Wis. Oct. 7, 2013) (explaining that “Sharp addressed the
admissibility of “[o]ral and not binding offers,” and distinguishing Sharp where “the
offers were written and, if accepted, binding upon the parties”). In the instant case, to
employ language from Sharp, “the owner himself, while declining the offer, really
believed in the good faith of the party making it, and in his ability and desire to pay the
amount offered,” as opposed to having been “regarded as a mere idle remark, not
intended for acceptance . . . .” 191 U.S. at 349. Again, at a minimum, the bona fide
purchase offer is relevant here to show what the Pennas themselves believed regarding
the value of their Property at the time they received the offer, allowed it to lapse, and
then countered with a higher amount – all of which occurred while this case was
pending, and during which time the Pennas consistently have claimed their Property is
valueless. See Republican Newspaper Co. v. Nw. Associated Press, 51 F. 377, 379 (8th Cir.
1892) (“[T]he fact [is] that when such property is for sale [and] parties are ready to buy
it[,] [it] shows that it has a value, and the price offered tends to prove what such value
is. In other words, proof of offers to purchase at given prices, made in good faith, is
some evidence of the actual value of the article sought to be purchased, as well as of its
salability.”); 50–Off Stores, Inc. v. Banques Paribas (Suisse), S.A., 180 F.3d 247, 255 (5th Cir.
1999) (offer for a significant amount of shares from a “legitimate buyer” appropriately
considered by jury in assessing damages); In re Grueneich, 400 B.R. 680, 687 (B.A.P. 8th
Cir. 2009) (“an offer to purchase an asset would normally constitute strong evidence of
the asset’s value, even if there is only one such offer made”); Ner Tamid Congregation of
N. Town v. Krivoruchko, 2009 WL 10696538, at *7 (N.D. Ill. July 9, 2009) (“whatever the
appropriate measure of damages, the $2 million offer might be admissible on the
question of the fair market value”).
B. The Pennas Erroneously Rely Upon Intentional, Direct, Physical
Takings Cases
Although the Pennas repeatedly concede that the Ridge Line framework governs
this case,36 the Pennas rely on several inapposite cases involving direct physical takings
to support their contention that the government appropriated a benefit at the Pennas’
expense by “channel[ing]” AFFF in the direction of the Property. Pl. Resp. at 8. Even
assuming that characterization of the government’s actions is accurate, to the extent that
the Pennas continue to maintain that the government’s conduct constitutes a per se
physical taking, see Pl. Memo. at 61, the Court rejects that argument. The Ridge Line and
36 See Pl. Memo. at 48–49, 58–60, 62, 64, 66; see also Pl. Resp. at 7, 9, 15, 37.
- 31 -
Moden cases – and the similar line of flooding cases upon which Moden is ultimately
based – provide the correct lens with which to view the Pennas’ takings claim, and not
the Loretto line of intentional, per se physical takings cases. As the government suggests,
and the Supreme Court’s decisions confirm, the Pennas’ approach to the case law “seeks
to swallow that distinction.” Def. 52(c) Mot. at 11.37
In the first case the Pennas cite,38 Bassett New Mexico LLC v. United States, 55 Fed.
Cl. 63 (2002), the government actually conceded liability for a physical taking after the
EPA deliberately stored contaminated soil on three acres of the plaintiff’s property
under the mistaken belief that the plaintiff had consented to such use. 55 Fed. Cl. at 66.
Bassett is inapposite here. Not only has the government not conceded liability in this
case, but also the government did not intentionally use the Penna Property for the
storage of any substance, let alone a hazardous one that otherwise would have required
the government to incur disposal or remediation costs. Simply put, Bassett involved an
intentional government act, resulting in a physical taking. Although, as noted above,
the Court does not reach the question of foreseeability or intentionality here, the
government conduct at issue in Bassett is not comparable to the government’s conduct
in this case, which is governed by the Moden, Ridge Line, and Arkansas Game & Fish
Commission tests, as opposed to the direct, physical taking cases. Bassett, 55 Fed. Cl. at
68 (“Plaintiff alleges, and the United States concedes, that the EPA’s removal action
constituted an uncompensated physical taking of Bassett's property.”). Moreover, even
if Bassett somehow were applicable to the facts of this case, Senior Judge Smith in Bassett
recognized that “compensable damages . . . require[] the Court to measure the degree to
which the removal action deprived Plaintiff of the value of each use constituting the
overall highest and best use of the Property before the removal action.” 55 Fed. Cl. at
69. Here, in contrast, the Pennas provided no such credible evidence of compensable
damages.
37 As explained above, see Banks, 138 Fed. Cl. at 147–48, the rationale of the chemical
contamination and flooding takings decisions makes them similar to, and analogues of, the
regulatory takings cases. “A regulatory restriction on use that does not entirely deprive an
owner of property rights may not be a taking under Penn Central.” Horne, 576 U.S. at 364 (“That
is why, in PruneYard Shopping Center v. Robins, 447 U.S. 74, 100 S. Ct. 2035, 64 L.Ed.2d 741 (1980),
we held that a law limiting a property owner’s right to exclude certain speakers from an already
publicly accessible shopping center did not take the owner’s property.”). In PruneYard, “[t]he
owner retained the value of the use of the property as a shopping center largely unimpaired, so
the regulation did not go ‘too far.’” Horne, 576 U.S. at 364 (quoting PruneYard, 447 U.S. at 83(internal quotes omitted)). The Pennas cannot avoid Ridge Line and Moden by redefining at trial
the putative property interest at issue.
38 See Pl. Resp. at 8.
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The Pennas cite Waverley View Invs., LLC v. United States, 135 Fed. Cl. 750, 798
(2018), aff’d, 767 F. App’x 996 (Fed. Cir. 2019), for the proposition that the government
cannot unilaterally burden a plaintiff with removing governmental material – in
Waverley, monitoring wells – placed on private property. Pl. Resp. at 8–9. Just like the
Bassett decision, Waverley is inapposite because it, too, is a physical per se takings case.
135 Fed. Cl. at 799 (holding that the “Army’s activities . . . effected a permanent physical
taking of those portions of the Waverley View Property actually occupied by the Army-
installed gravel access road and monitoring wells”). The Pennas’ case is further
distinguishable from Waverley because there is no credible evidence that the Pennas
must remove or otherwise remediate the AFFF on their Property. In fact, the only
evidence addressing the issue is Mr. Mulhall’s unsupported opinion (and Mr. Hosey’s
subsequent adoption of it) that “[i]mpacted groundwater, surface water, soils, and
sediments must be removed.” Tr. 351:16–17. Mr. Mulhall, however, is a geologist and
hydrogeologist and thus is not qualified to opine on the necessity of removing
particular substances.39 As the record stands, the Pennas failed to provide any credible
evidence not only of the necessity of removing the contamination, but also any cost they
incurred or would have to incur in order to do so. 40 In fact, as noted above, the Pennas
at times argue that the contamination cannot be remediated. See, e.g., Tr. 464:13–16; Tr.
519:10–13 (“MR. SINGER: And in your appraisal, you do not present remediation costs
in your work, correct? MR. HOSEY: Because the subject property cannot be remediated
by the subject property owners.”).
Finally, the Pennas rely on Hendler v. United States, 952 F.2d 1364, 1375 (Fed. Cir.
1991), for the proposition that an individual has the right to exclude “free riders” (i.e.,
the government) from his or her property. Pl. Resp. at 8–9. This is yet another case in
which monitoring wells were placed on private property. Hendler, 952 F.2d at 1377
(“When the governmental intrusion is as substantial a physical occupancy of private
property as this is, Loretto establishes that there is a taking.”). 41 Unlike Hendler, the
39See Tr. 613:9–14 (Mr. Mulhall admits that he is a not a licensed toxicologist and does not have
a wastewater engineering license).
40If the Pennas had provided credible expert testimony that, as a matter of law, the PFOS and
PFOA were considered so toxic that their removal was required in order for the Property to be
inhabitable, or if the Pennas had provided credible evidence that it was prudent to do so in light
of their potential hazard (and provided some evidence of the likely cost), the result of this case
may well have been different.
41The Pennas also cite John R. Sand & Gravel Co. v. United States, 457 F.3d 1345, 1356 (Fed. Cir.
2006), for the proposition that a property owner has the right to exclude others from his or her
land, but that case is similarly distinguishable. Moreover, even if the case law supported
equating the contamination of the Penna Property with a physical invasion resulting from the
intentional storage of chemicals on their Property, the Pennas failed to quantify (or even to
attempt to quantify) the value of such “storage.”
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instant case is not subject to a Loretto analysis, an approach which would be contrary to
Ridge Line and Moden (and the Supreme Court’s similar analysis in flooding cases). See
Boise Cascade Corp. v. United States, 296 F.3d 1339, 1355, 1357 (Fed. Cir. 2002) (explaining
that “[o]ur decision in Hendler rested squarely upon the permanent nature of the wells
and the regular government intrusions to monitor them” and that “ Hendler’s holding
was unremarkable and quite narrow: it merely held that when the government enters
private land, sinks 100–foot deep steel reinforced wells surrounded by gravel and
concrete, and thereafter proceeds to regularly enter the land to maintain and monitor
the wells over a period of years, a per se taking under Loretto has occurred” (emphasis
added)). In sum, the Court concludes that, under the appropriation prong of Ridge Line
and Moden, the Pennas have failed to demonstrate any substantial impact to their use of
the Property or any concrete economic impact from the contamination at issue.
C. The Pennas Failed To Prove “Just Compensation” For Their Property As
A Whole (Or Any Property Right)
In terms of the property right the Pennas claim was taken by the government, the
Pennas present this Court (and the government) with a moving target. While the
Pennas focused almost the entirety of their case at trial on the value of the Property as a
whole, the Pennas argued, in their opposition to the government’s RCFC 52(c) motion,
that the property right taken by the government “is the plaintiffs’ right to exclude the
Government’s chemicals from their property.” Pl. Resp. at 7.42 Similarly, in their
pretrial brief, the Pennas allege that “[c]ontamination of the well alone is a cognizable
taking,” see Pl. Memo. at 66, but never explain how their use of the well was impaired
aside from an inability to drink the water (which the Navy cured by providing bottled
water). Nor, for that matter, did the Pennas offer any evidence quantifying the
damages associated with any alleged interference with the use of any part of the
Property, apart from contending that contamination renders the entire Property as a
whole worthless.
Regardless of which, if any, specific property right the Pennas ultimately claim
was taken, the Pennas failed to present any credible evidence of the value of that right
(i.e., whether the Pennas point to the ability to use their Property for gardening or their
42The Court agrees with the government that this claim does not properly address the case law,
the government’s arguments, or the Court’s question regarding Plaintiffs’ definition of the
property or scope of property rights that they allege were taken. Instead, as the government
explains, “Plaintiffs, rather than addressing the United States’ argument, answer the Court’s
questions with a tautology: according to Plaintiffs, the invasion of the ‘the Government’s
chemicals’ resulting in a taking of Plaintiffs’ property right to ‘exclude the Government’s
chemicals from their Property.’” Def. Rep. at 20 (quoting Pl. Resp. at 7). As noted above, the
Court rejects the Pennas’ approach to the takings jurisprudence that governs the outcome here.
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right to exclude chemicals from their land). In that regard, the Federal Circuit has held
that “the trial court in a takings case is not obligated to fashion its own award when a
plaintiff has not provided evidence sufficient to determine just compensation with
reasonable certainty.” Gadsden Indus. Park, LLC v. United States, 956 F.3d 1362, 1371
(Fed. Cir. 2020); see also Otay Mesa Prop., L.P. v. United States, 779 F.3d 1315, 1322 (Fed.
Cir. 2015) (“[T]he fact that a taking occurred does not itself establish what compensation
should be awarded. What is critical in the determination of just compensation is not the
gain to the government from the taking, but the actual loss to the landowner.”). Here,
even assuming that the injury the Pennas claim is compensable under a Fifth
Amendment takings theory, the Pennas have failed to prove the quantum of that injury
necessary to assess any “just compensation” allegedly owed.
For example, in Vaizburd v. United States, “[t]he Court of Federal Claims
concluded that the government’s sand deposit on the Vaizburds’ property constituted
the physical taking of a permanent easement, but it denied recovery on the ground that
the Vaizburds failed to establish any decline in the fair market value of their property.”
384 F.3d 1278, 1279 (Fed. Cir. 2004). The Federal Circuit agreed with this Court that
“the Vaizburds [had] not established that they are entitled to recover compensation for
a decline in the market value of their property,” but vacated the decision and remanded
“for further consideration of the Vaizburds’ claim that they are entitled to recover on a
cost of cure theory.” Id. at 1280. As in Vaizburd, the Pennas have failed to prove any
diminution in the fair market value of their Property other than arguing that the
Property is entirely worthless. As explained above, the Court rejects the Pennas’
contention that their Property is valueless. Furthermore, the Court considered a “cost
of cure theory” here, and the Pennas had ample opportunity to present such evidence,
but the Pennas did not establish that remediation of the contamination is necessary, nor
did the Pennas attempt to quantify the cost of such a cure. 43
In sum, based on the trial evidence, the Court finds that the Property is
marketable and potentially sellable:44 not only have other, similar properties sold for
43The Court agrees with the government that Plaintiffs’ complaint does not assert a claim for
the appropriation of a flooding (or a similar) easement. See Def. Rep. at 2-3 n.1. The Court
shares the government’s multiple concerns with any suggestion that such claims had been
asserted or otherwise preserved, but the Court finds in any event that the government is correct
that “Plaintiffs did not offer any expert testimony suggested any alleged flooding easement
reduced the value of Plaintiffs’ property.” Id.44To the extent the salability of the Penna Property is impaired, that is more easily explainable
by its numerous liens that would have to be cleared in a short sale, a situation for which the
government is not in any way responsible. Stip. ¶¶ 3–8.
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consideration – some during the pendency of this litigation45 – but the Pennas themselves
received a viable offer to purchase their Property, an offer which the Pennas allowed to
lapse. Having found that both Mr. Cammarata’s and Mr. Hosey’s expert testimony is
deeply flawed, the Court concludes that there is little to no evidence to support the
allegation that the Property is unmarketable, not mortgageable, unsellable, or valueless
in its current state. The Court thus agrees with the government that “[w]hether
preemption is measured by a property’s loss in usefulness or loss of market value,
Plaintiffs failed to provide any credible factual support for their argument that the
presence of PFOS and PFOA on their property preempted their enjoyment of their
property.” Def. 52(c) Mot. at 12. Aside from contending that the Property cannot be
sold, the Pennas failed to offer any other theory or evidence of diminution in value,
which is unsurprising given Plaintiffs’ all-or-nothing approach to their case. Compl.
¶ 27 (“[The Pennas’] property is virtually valueless.”). Thus, even if the government
could be held liable for some impact to the Property under a takings theory, there is a
complete lack of preponderant evidence upon which to award just compensation.
VI. PLAINTIFFS’ COUNSEL VIOLATED THIS COURT’S DISCOVERY
RULES
As noted above, following the close of Plaintiffs’ case-in-chief, the Court
suspended the trial proceedings due to Plaintiffs’ apparent discovery violation, newly
produced documents, and the parties’ resulting Stipulation. In addition to issuing a
schedule for the government to submit its RCFC 52(c) motion, the Court ordered the
parties to address a number of questions the Court posed to better understand the
impact of the newly disclosed documents, as well as the facts and circumstances
surrounding the purchase offer and how Plaintiffs had described that failed purchase
transaction in their discovery responses, court filings, and testimony. See ECF No. 125
(raising concerns about whether Plaintiffs’ counsel had a possible conflict of interest in
advising the Pennas about the proposed purchase of their property, whether Plaintiffs’
counsel was a witness to the purchase transaction and thus to material facts central to
the issue in the trial, and whether he violated his duty of candor to the Court). The
Court next turns to analyzing those issues.
The Plaintiffs’ pretrial memorandum includes a section of factual averments with
the following heading: “The Navy substantially interfered with the use and enjoyment
[of the] property, resulting in a taking for which just compensation is due.” Pl. Memo.
at 43 (Section IV.G, containing ¶¶ 105–16). That section lays out the heart of the
45See PX 131 (Slide 26 of Mr. Hosey’s direct testimony (listing nearby properties, including one
on the same street as the Penna Property, that sold for consideration between 2017 and 2019,
and indicating associated mortgages)). This action was filed on November 18, 2016. Compl.
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appropriation the Pennas had intended to prove at trial. In particular, the Pennas
explained that the government’s action contaminated their Property (id. ¶¶ 105–06) and,
as a result, the Pennas (1) “stopped using their vegetable garden” (id. ¶ 107), (2) “no
longer use their well water for drinking, and stopped using it for outdoor cooking and
barbecues” (id. ¶ 108), (3) could not subdivide their Property to construct town homes
“without getting a clean environmental bill of health,” which was “unavailable . . .
because of the known contamination” and “because the full extent of the contamination
is not known” (id. ¶ 109), and (4) “have not attempted to rent their house out for
domestic use, because they are concerned that is not safe for children to play in the
backyard, or for the owners to plant vegetables . . . or drink from the well that service[s]
the garage” (id. ¶ 111).
As discussed above, those allegations at trial were either essentially abandoned
or fail for a complete lack of proof (or, in the case of voluntary cessation of an activity,
do not constitute support for an alleged taking in any event). Instead, for the purpose
of meeting the Ridge Line and Moden tests for a taking – and for the purposes of proving
a quantum for just compensation – the Pennas relied at trial almost entirely upon the
theory that “[b]ecause there is no cure for the recurrent pollution of the Penna
Property[,] it is not eligible for a mortgage” and “[b]ecause the property is . . . not
eligible for a mortgage, and there are no comparable sales of contaminated properties, it
has no market value.” Pl. Memo. ¶ 112–14.
In that context, the Pennas explained that they would prove as follows:
The Pennas have attempted to sell their property, without
success. At least two realtors initially refused to list the
property. In 2018, as a result of foreclosure proceedings, the
property was listed for sale. An offer for $746,000 was made,
contingent on a $475,000 mortgage, and was then withdrawn.
Pl. Memo. ¶ 110. The Pennas further averred that: (1) “[t]he property is not eligible for
a mortgage and not marketable for sale”; and (2) “[t]he contamination has prevented
plaintiffs from being able to mortgage or sell the property.” Id. at 67 (emphasis added).
The pretrial brief was signed by Plaintiffs’ counsel, Mr. Cuker, and filed with the Court
on March 17, 2020.
Particularly in light of the heading under which the foregoing description of the
Pennas’ efforts to sell the Property is located in their pretrial memorandum, the
calculated purpose was to lead the Court to believe that the sale failed due to
environmental contamination. The assertion in the pretrial memorandum that the
purchase offer “was . . . withdrawn” is consistent with the Pennas’ interrogatory
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responses, similarly executed by Mr. Cuker (transmitted to the government on or about
August 30, 2019). In that regard, in response to the government’s interrogatory about
“listing the property for sale or the possibilities for selling” it, the Pennas indicated that
“[a]n offer was made, but the prospective buyer backed out.” ECF No. 134-3 at 6
(Response to Interrogatory No. 11).
At trial, Mr. Cuker attempted to support the allegations regarding the Pennas’
inability to sell the property by eliciting the following testimony from Mr. Penna during
his direct examination:
Q. Did you make an effort to sell the property?
A. Yes, we did.
Q. And how long was the property listed for sale?
A. The property was listed for six months. Yes, six months.
. ..
Q. And did the property sell when it was listed in 2018?
A. No, it did not.
Q. What do you think your property is worth today?
A. To me, the money and time and everything I’ve put into it --
Q. No, let me -- no, with the contamination, in its contaminated state, what
do you think the property is worth today?
A. Well, I -- well, it’s not worth anything today. Zero.
Tr. 207:25–208:21. Accordingly, Plaintiffs and their counsel unequivocally intended the
Court (and the government) to believe that the Property did not sell and was rendered
worthless because of the contamination.
The government, in contrast, attempted to show during Mr. Penna’s cross-
examination that although there had been a potential buyer for the Property, one reason
for the failed sale may have been the “several liens” the Pennas had to disclose to the
realtor. Tr. 235:7-21. Plaintiffs’ counsel objected to the entire line of questioning as
irrelevant “to the facts of this case.” Tr. 239:9-10. The government responded that “it
goes to that [Mr. Penna] had stated that he couldn’t sell his property, couldn’t subdivide
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or do anything with his property due to the contamination, and this is showing a
different alternative reason as to why a property with a potential buyer did not sell.”
Tr. 239:14-19. In rebuttal, Mr. Cuker essentially denied that he had opened the door to
the government’s cross-examination questions, but in any event withdrew his objection,
stating that “I am not going to argue it here. You know, . . . if they want to suggest this
is the reason the property can’t sell, I will go into this with Mr. Penna on redirect
examination.” Tr. 240:10-23.
Continuing with the cross-examination, the government showed Mr. Penna what
the government believed to be the “purchase [offer] for the property . . . in the amount
of $746,000.” Tr. 243:15-18. Mr. Penna readily agreed with that characterization and
testified that the would-be purchaser “backed out” after the Pennas provided
environmental disclosures. Tr. 243:19-244:2; see also Tr. 246:9-12 (Mr. Penna testifying
that “after the offer and after everything that [the buyer] received . . . from us, . . . it was
too complicated for him to get involved with it”); Tr. 247:6-12 (Mr. Penna testifying that
after the realtor provided the would-be buyer with environmental disclosures, “that’s
when we got the response that it’s complicated and he didn’t want to buy it”); Tr. 278:5 -
7 (Mr. Penna testifying that after the would-be buyers “received . . . disclosures on the
issues of the environment, that they didn’t want to go, that it was too complicated for
them”).
As detailed above, see supra Section I.D, due to a discrepancy the Court noticed
among the documents Plaintiffs’ counsel employed during his examination of
Mr. Penna, the Court ordered the parties to meet-and-confer regarding a possible
discovery violation. Tr. 259:1–6. The resulting Stipulation demonstrates that two
critical assertions in the Pennas’ pretrial memorandum were false: (1) the potential
buyers never offered the Pennas $746,000 for their Property; and (2) the potential buyers
never withdrew their purchase offer. Instead, what actually happened is that the
potential buyers made an offer to purchase the Penna Property for $725,000 which
required the Pennas’ acceptance by August 25, 2018, but the Pennas did not sign and
accept that offer in a timely manner. Stip. ¶ 9, 12, 16. More significantly, the parties
stipulated that “[t]he prospective sale of the property did not fail because of
environmental issues.” Id. ¶ 31 (emphasis added).
Given these falsities, the Court has serious concerns regarding whether Plaintiffs’
counsel violated his duty of candor. Indeed, the clear discovery violation, for which
Plaintiffs’ counsel is responsible, exacerbated the impact of both the false assertions of
fact and the erroneous impressions conveyed to the Court.
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Pursuant to Rule 3.3 (“Candor Toward the Tribunal”) of the American Bar
Association’s Model Rules of Professional Conduct: 46
(a) A lawyer shall not knowingly:
(1) make a false statement of fact or law to a tribunal or fail to
correct a false statement of material fact or law previously
made to the tribunal by the lawyer;
. . . or
(3) offer evidence that the lawyer knows to be false. If a
lawyer, the lawyer’s client, or a witness called by the lawyer,
has offered material evidence and the lawyer comes to know
of its falsity, the lawyer shall take reasonable remedial
measures, including, if necessary, disclosure to the
tribunal. . . .
. ..
(c) The duties stated in paragraphs (a) and (b) continue to the
conclusion of the proceeding, and apply even if compliance
requires disclosure of information otherwise protected by
Rule 1.6.
Candor Toward the Tribunal, Ann. Mod. Rules Prof. Cond. § 3.3 (explaining that the Rule
“sets forth the special duties of lawyers as officers of the court to avoid conduct that
undermines the integrity of the adjudicative process”). 47 While “[a] lawyer acting as an
advocate in an adjudicative proceeding has an obligation to present the client’s case
with persuasive force[,] [the] [p]erformance of that duty . . . is qualified by the
advocate’s duty of candor to the tribunal.” Id. “Consequently, although a lawyer in an
adversary proceeding is not required to present an impartial exposition of the law or to
vouch for the evidence submitted in a cause, the lawyer must not allow the tribunal to
be misled by false statements of law or fact or evidence that the lawyer knows to be
46This Model Rule is identical to Rule 3.3 of the Pennsylvania Rules of Professional Conduct, see
http://www.padisciplinaryboard.org/for-attorneys/rules/rule/3/the-rules-of-professional-
conduct.
47 Rule 1.6 “governs the disclosure by a lawyer of information relating to the representation of a
client during the lawyer’s representation of the client.” Confidentiality of Information, Ann. Mod.
Rules Prof. Cond. § 1.6.
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false.” Id.; see also Hanover Ins. Co. v. United States, 146 Fed. Cl. 447, 450 (2019) (noting
“the truism that attorneys must not mislead the court”).
In this case, Mr. Cuker is responsible for the assertions in the pretrial
memorandum and Mr. Penna’s testimony – all of which appear to have been calculated
to lead the Court to conclude (erroneously) that while an offer was made to the Pennas
to purchase their Property for substantial value, that potential sale was tanked due to
the environmental disclosures the Pennas provided. In the context of this case, no other
conclusion is reasonable. 48
First, the Court notes that the primary, if not sole, theory of the takings claim
here (in terms of the appropriation-prong of the Ridge Line and Moden tests) – and the
only theory for which Plaintiffs presented a damages calculation of any kind – is that
the Penna Property was worthless because it was not mortgageable and thus not
sellable, an assertion significantly undermined, if not completely eviscerated, due to the
actual facts contained in the Stipulation.
Second, Plaintiffs falsely asserted that “[a]n offer for $746,000 was made . . . and
was then withdrawn” in the context of the appropriation argument in the pretrial
memorandum. Pl. Memo. ¶ 110. Mr. Cuker never corrected the record, but rather
elicited testimony from Mr. Penna that the offer was for $746,000. Tr. 243:15–18. There
is now no dispute that the offer, in fact, was not for $746,000 – it was for $725,000 – and
that the actual offer for the lower amount was never withdrawn. Rather, it lapsed
because the Pennas did not accept it. The Plaintiffs’ erroneous assertions of fact thus
had two consequences (until the Court and the government discovered the truth): they
left the impression that a willing buyer would have valued the Property at an even
higher amount, and that environmental concerns doomed the transaction. Again,
neither of those things are true, something Plaintiffs now admit.
Third, Mr. Cuker’s defense of his actions in both his filings and at trial provides
this Court with more confidence – not less – that his conduct is problematic to say the
48As in many areas of the law, “context is everything” here. Campbell v. Acuff-Rose Music, Inc.,
510 U.S. 569, 589 (1994) (fair use under copyright law); see also Gissin v. Endres, 739 F. Supp. 2d
488, 506 (S.D.N.Y. 2010) (noting that “context is everything” in securities case involving
allegations of false and misleading statements); United States v. Baynes, 369 F. App’x 365, 367 (3d
Cir. 2010) (“context is everything when distinguishing between a threat of death and threats of
violence in general”); Chapman v. Target Corp., 2020 WL 8093566, at *1 (D. Colo. Oct. 20, 2020)
(noting that “context is everything” in deciding whether a party violated Rule 26 of the Federal
Rules of Civil Procedure); Ryan v. Town of Schererville, Ind., 2005 WL 1172614, at *10 (N.D. Ind.
May 4, 2005) (“context is everything” in a sex discrimination case); Gresham v. Meden, 938 F.3d
847, 849 (6th Cir. 2019) (“context is everything in [statutory] interpretation”).
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least. Mr. Cuker asserts that the misstatements in the pretrial memorandum “were
inadvertent” and that “Plaintiffs’ counsel did not knowingly make a false statement of
fact . . . .” Pl. Resp. at 38. He further asserted that he “believes that he mistakenly
included the wrong amount when preparing the Memorandum while working
remotely in the early days of the pandemic . . . and misinterpreted the handwritten
counteroffer . . . as having been the prospective buyer’s offer.” Id. The Court cannot
decide whether these assertions are merely implausible or constitute yet further
misrepresentations. For starters, Mr. Cuker’s pretrial memorandum is consistent with
his pre-pandemic interrogatory responses that reflect a similar theme in asserting that
the would-be buyers “backed out” of the proposed purchase. ECF No. 134-3 at 6
(Response to Interrogatory No. 11). Indeed, as explained above, the consistent, but
ultimately false, narrative Plaintiffs and Mr. Cuker advanced was that the would-be
buyers “backed out” of the transaction only after, and due to, the environmental
disclosures. See Tr. 247:6-12; Tr. 278:5-8.
There are three significant problems with the assertion that the would-be buyers
“backed out” due to environmental concerns: (1) the buyers’ offer expired by its own
terms when the Pennas failed to accept it in a timely manner; (2) “Plaintiffs have no
written evidence showing whether or when [a] counteroffer was actually transmitted. . .
to the prospective buyers or their real estate agent”; and (3) Mr. Cuker himself was
involved in the proposed transaction, insofar as (a) he instructed the Pennas not to sign
the offer,49 and (b) he either participated in preparing the draft counteroffer or, at the
49This fact also raises two separate, additional concerns: (1) whether Mr. Cuker had a conflict of
interest with respect to advising the Pennas regarding the potential purchase of their Property
(because had the transaction proceeded, this takings case would have been all but over), and (2)
whether because the failed transaction was part of Plaintiffs’ case, Mr. Cuker effectively became
a witness when he involved himself in the proposed transaction. See Conflict of Interest: Current
Clients, Ann. Mod. Rules Prof. Cond. § 1.7, cmt. 8 (“Even where there is no direct adverseness, a
conflict of interest exists if there is a significant risk that a lawyer’s ability to consider,
recommend or carry out an appropriate course of action for the client will be materially limited
as a result of the lawyer's other responsibilities or interests.”); Conflict of Interest: Current Clients,
Ann. Mod. Rules Prof. Cond. § 1.7, cmt. 10 (“The lawyer’s own interests should not be
permitted to have an adverse effect on representation of a client.”); Lawyer as Witness, Ann.
Mod. Rules Prof. Cond. § 3.7, cmt. 1 (“Combining the roles of advocate and witness can
prejudice the tribunal and the opposing party and can also involve a conflict of interest between
the lawyer and client.”); see also Lee J. Rohn & Assocs., LLC v. Chapin, 2018 WL 6721388, at *5 (V.I.
Super. Ct. Dec. 18, 2018) (noting that the court was “leery of the ways [the attorney’s] own
pecuniary interest [was] tangled up with the interests of [the party] in the outcome of their
dispute”). The government declines to press this issue, however, and, in the absence of any
additional facts, the Court does as well. Def. 52(c) Mot. at 47–48 (“The United States cannot
identify at this time any harm or prejudice to its interests as a result of Plaintiffs’ counsel’s
possible conflict of interest.”). Instead, the Court focuses – as does the government – on “the
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very least, the realtor expressly sent it to him for his review. Stip. ¶¶ 17, 19–21, and
included exhibits DX 326 (email from realtor noting that she “[r]eceived a call from [the
Pennas’] attorney, he has directed them to sign nothing until he reviews”); DX 329
(realtor noting she is sending to Mr. Cuker “another email with the copy we marked up
including attachments” and instructing that he should “review and make changes, as
you see necessary, to protect your clients Lisa and Frank [Penna]”); DX 330 (marked-up
sales agreement including environment disclosures transmitted to Mr. Cuker). 50
Fourth, Mr. Cuker’s argument during trial provides further support that he may
well have acted with scienter in regard to the misrepresentations. At trial, Mr. Cuker
asserted that his wording was carefully chosen:
We have never contended that this sale fell through because
of environmental issues. All we said was the sale fell through
. . . . [W]e answered interrogatories on this particular issue a
primary prejudice to the United States” – “the nondisclosure of information about the 2018 sale
negotiations and the incomplete production of the documents related to those negotiations.” Id.
at 48.
50 Mr. Cuker inexplicably denied being involved with the putative counteroffer or knowing why
the Pennas did not sign and accept the offer, see Tr. 691:23–692:6. Indeed, he asserted that “[t]he
only communications I had with [the realtor] Ms. Coletti were she sent me the agreements, and,
therefore, I was able to produce them. . . . [O]ther than that, I had no communication with
Ms. Coletti.” Tr. 692:9 - 692:13. There are two striking problems with that statement. The first
is that it undercuts Mr. Cuker’s original assertion to the Court that the documents in question
likely were not produced because they were not responsive to the government’s discovery
requests. Tr. 275:6–9. The second problem is that the cited exhibits demonstrate that
Mr. Cuker’s involvement certainly was substantive; he did not communicate with Ms. Coletti
solely for the purposes of this litigation. Indeed, that much was verified in a later (troubling)
exchange with the Court:
THE COURT: Let’s look at [Stipulation] Exhibit 7, Defendant’s
Exhibit 329. . . . [D]o you recall telling Ms. Coletti that you directed
the Pennas not to sign anything until you had a chance to review?
MR. CUKER: I probably did, yes.
THE COURT: Do you recall it?
MR. CUKER: I think I did. I think I said that I had concerns about
the sale of contaminated real estate, and I needed to make sure they
were protected before any agreement went through. And then
when I got the agreements, I referred the matter over to another
attorney to handle the drafting of the language.
Tr. 754:17-18; 755:1-19. Thus, even when confronted with clear, documentary evidence,
Mr. Cuker was frustratingly evasive.
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year ago, and in those answers to interrogatories, what we
said was that we had an offer and the buyer backed out. That
is all we ever said.
. ..
And neither I nor my client ever said that we know it fell
through because of an environmental issue. We are not taking
that position.
Tr. 295:1-15. But, that assertion critically ignores the context in which one of those
assertions was made; to wit, in the pretrial memorandum, in support of the Pennas’ primary
(if not only) takings claim that the property could not be sold due to environmental reasons .
Mr. Cuker seems to contend that because he never used those precise words, he has an
escape hatch. That implied assertion is pure sophistry. Republic Techs. (NA), LLC v. BBK
Tobacco & Foods, LLP, 2018 WL 6067252, at *3 (N.D. Ill. Nov. 20, 2018) (criticizing party
as having “engaged in a tactic that is, in our view, ‘too cute by half’”). Indeed, if
Mr. Cuker did not intend to communicate the false narrative that the proposed
transaction failed due to environment disclosures, why did he raise the transaction at all
in his pretrial memorandum? After all, Mr. Cuker – not the government – put this
subject at issue, both in his pretrial memorandum and in presenting Plaintiffs’ case-in-
chief. In that regard, before the correct and complete facts were known to the
government and the Court, Mr. Cuker doubled down in his redirect examination of Mr.
Penna, specifically eliciting testimony to make it appear that the transaction at issue
failed due to environmental concerns. Tr. 273:19-274:2 (Mr. Cuker asking Mr. Penna
about a putative counteroffer including “the environmental addendum”). 51
Fifth, it was Mr. Cuker’s aforementioned line of questioning of Mr. Penna that, in
part, led to the government’s and the Court’s learning of a possible discovery violation
and, ultimately, to the Stipulation in which the true facts finally came to light. Thus,
when Mr. Cuker asked Mr. Penna about what happened following the alleged
environmental addendum’s having been provided to the would-be purchasers – again,
an asserted fact for which there is no documentary evidence – the government objected
and, in response, the Court raised what turned out to be an appropriate tone of concern:
MS. MINOTT: . . . This is the first time that we are seeing this
document. This has not been produced to the Government.
51As the Court has noted, however, the parties agree that there is no documentary evidence
whatsoever that any counteroffer or any environmental addendum was ever transmitted to the
buyers. Stip. ¶ 28.
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So we would just ask that it be provided to us, if we could . . .
be allowed to look at this material before it’s submitted or
before anything -- because this is the first time we are seeing
this.
THE COURT: Mr. Cuker, if that's the case, there is going to
be a problem.
MR. CUKER: We will certainly send it to them right now.
We thought we had produced it. If not, it may be because it was
not actually responsive to any specific discovery request.
THE COURT: Oh, come on. It’s your [same] exhibit. It’s just
more complete.
Tr. 274:22–275:11 (emphasis added). Mr. Cuker never made any attempt to show that
the government’s discovery requests were inadequate or somehow did not cover the
documents he failed to turn over to the government during discovery.
Sixth, while Mr. Cuker later asserted that his failure to provide to the
government nearly one hundred documents during discovery was inadvertent, 52 the
discovery violation furthered Plaintiffs’ narrative – which ultimately proved false –
surrounding the purchase offer and the Pennas’ having declined to accept it, the latter
pursuant to Mr. Cuker’s direction. The prejudice to the government was well
articulated by its counsel (which the Court quotes at length due to its importance):
MR. SINGER: . . . [W]e did not receive a version of the offer.
PX64 is not the offer. It’s a permutation of a counteroffer that
we have seen no evidence was ever sent to the buyers, and, in
fact, PX64 is what misled the United States -- and, frankly, the
Court -- into believing, during Mr. Penna’s testimony, that
there was a sales contract [that failed] when there was none.
Your Honor may recall that you asked Mr. Penna why
Mr. Penna did not enforce the contract. The reason Mr. Penna
did not enforce the contract is because there was no contract
to enforce. What you’re seeing in PX64 is an internal write-
up by the Pennas of the original sales contract that they
52Tr. 698:6–8 (“I admit, I should have produced the complete agreements, and that was an
inadvertence on our part”).
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received. The original sales contract did not have . . . any of
the handwritten text . . . or the stamps that we see . . .
THE COURT: Mr. Singer, I’m looking at Plaintiffs’ version of
– [PX]64 provided to the Court . . . in their exhibit binder, and
my version has the buyers’ signatures, some stamps for
initials without initials, and [other handwritten edits]. . . . So,
I’m sorry, can you now explain – it’s got the counteroffer of
[$746,000], like you said, and [$725,000] is crossed out, and the
counteroffer of [$746,000] is written in. So is your point,
Mr. Singer, that this is a mocked-up version of the
counteroffer but isn’t the offer standing alone?
MR. SINGER: That’s correct, Your Honor.
THE COURT: And you never got th[e] [offer itself]?
MR. SINGER: We never received -- I had never seen the
clean offer, because that was why the Government was
laboring under the [incorrect] assumption that the
handwritten notes that Your Honor sees on page 1 of PX64, it
was our understanding that those were the terms of the
original offer, and it was not until supplemental production
this week that we understood that the original offer did not
have the handwritten text that you see under paragraph 32(a),
and also did not have . . . the strike-out of the word “zoned”
and the addition of “permitted to be used.” Those were all
changes made in the formulation of a counteroffer.
THE COURT: Mr. Singer, when you said supplemental
production, you mean the one essentially ordered by the
Court during trial?
MR. SINGER: Yes. That’s exactly what I’m referring to . . . .
THE COURT: Okay. There was no . . . voluntary production
where someone realized that some documents were missing,
some production, on the Plaintiffs’ side[?]
MR. SINGER: No. That’s correct, Your Honor.
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Tr. 699:14-701:17; Def. 52(c) Mot. at 8 (“Plaintiffs’ counsel’s initial revelation was
followed by a staggered production of additional documents that culminated in a
stipulation the parties filed on August 6, 2020 . . .”).
In response to Mr. Singer’s explanation, Mr. Cuker argued that his discovery
failure was harmless because it actually benefited the government insofar as “[t]he
document we produced makes it look like the buyer, with full knowledge of the
environmental problem, offered $746,000.” Tr. 701:21–23; see also Pl. Memo. at 40. But,
as the Court pointed out, “it also makes it look like . . . from the email, that the buyers
backed out before the close date of the . . . acceptance period, when really the
acceptance period had lapsed without the sellers signing the agreement.” Tr. 702:13–17.
In that regard, the Court pressed Mr. Cuker to explain “[w]hat was the point –- what
were you trying to show with paragraph 110 [of the pretrial memorandum]?” Tr.
763:11–12. Mr. Cuker responded: “Well, I’m just giving context of the history . . . . We
simply wanted to present the evidence that didn’t come out that there was an offer and that
the sale did not go through, but we did not say in here that it was withdrawn because of
environmental concerns.” Tr. 763:13–18 (emphasis added). The Court still does not
understand how Mr. Cuker’s reference to “evidence that didn’t come out” addresses the
Court’s concern.
Moreover, Mr. Cuker’s response merely begs the further question of why
Plaintiffs would have any interest in providing “context” or “history” that either is
irrelevant or is beneficial to the government. Admissible trial evidence, by definition, is
that which is probative regarding some element of the case before the Court. Fed. R.
Evid. 401. Thus, the only reasonable answer to the Court’s question is that Mr. Cuker
sought to induce the Court at least to infer that the failed transaction supported
Plaintiffs’ central claim that the Penna Property is not sellable. 53 Put differently still, the
point of the erroneous assertions in the Pennas’ pretrial memorandum – when
considered in context, and in light of the interrogatory responses (executed long before
the pandemic) and Mr. Penna’s subsequent trial testimony – can only be read as
averring the very thing that Mr. Cuker never said in so many words: that the offer was
withdrawn because of environmental concerns. The fact that Mr. Cuker never used that
formulation verbatim is immaterial, particularly where, as here, the evidence necessary
to determine the whole truth was never disclosed to the government until during trial
and, even then, only when ordered to do so by the Court. Raymo v. Sec’y of Health &
Hum. Servs., 2014 WL 1092274, at *16 (Fed. Cl. Feb. 24, 2014) (failure to “tell the whole
53 Thus, the government fairly argued that “certainly the initial production that we got is not
representative of what happened, and . . . we came in not having an understanding of what the
. . . sequence of events were in relation to what’s actually a pretty important issue at trial . . . So
in that sense we were pretty unfairly disadvantaged . . . .” Tr. 435:25–436:9.
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truth . . . demonstrate[s] a lack of candor”); In re SoCal Sleep Centers, LLC, 2016 WL
4198534, at *9 n.13 (B.A.P. 9th Cir. Aug. 8, 2016) (noting that the court was “particularly
dismayed by [counsel’s] argument that, despite her ethical duty of candor to the
tribunal, . . . she was free to use her ‘discretion’ to decide when to tell the bankruptcy
court the whole truth, rather than just part of the story. A half-truth is a half-lie”).
In sum, the Court agrees with the government that “Plaintiffs’ production
omitted at least three key documents – the buyer’s original offer, the draft counter-offer,
and the Plaintiffs-signed counteroffer” and thus “never answered the United States’
[interrogatory] questions before introducing these documents at trial.” Def. 52(c) Mot.
at 39-40 (citing and discussing DX328, DX330, and DX332). The Court further agrees
that “[t]hese three documents are critical to evaluating Plaintiffs’ substantiality claims
and Plaintiffs have provided no substantial justification for their failure to produce
them in discovery or at any point prior to trial.” Id. Indeed, Mr. Cuker did not produce
the documents in question until the Court ordered him to do so. Pl. Resp. at 33
(acknowledging supplemental production of documents during trial “[p]ursuant to
court order”). The result is that the government was denied “the opportunity to explore
the significance of these documents in discovery.” Def. 52(c) Mot. at 41.
To be clear, the Court is not criticizing Mr. Cuker for creatively arguing about
what the Court should conclude based upon a proven set of facts, or for arguing about
the significance of those facts within the substantive legal framework applicable in this
takings case (e.g., Ridge Line and Moden) – all of which would constitute zealous
advocacy by counsel. What a lawyer may not do, however, is decide on the conclusion
he or she wants the Court to reach, and then selectively shape and edit the facts – i.e., by
making erroneous factual assertions in briefs and eliciting erroneous testimony at trial –
all while relying upon carefully crafted verbiage to preserve plausible deniability and
failing to disclose documents that would otherwise significantly undermine the desired
conclusion.
In considering whether to issue sanctions here, the Court is mindful of the
rationale underlying the duty of candor, to the extent simple honesty is insufficient:
The duty of candor is an important part of our justice system
for several reasons. First, . . . the duty of candor is an integral
part of ensuring that our system of justice functions properly
because first and foremost an attorney is an officer of the
court, an institution whose purpose is to seek the truth in
order to do justice . . . . Second, the duty of candor is important
to providing clients with an attorney’s “independent
professional judgment” so as to not create unreasonable client
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expectations, which when dashed can undermine confidence
in the justice system . . . . Third, the duty of candor helps
promote judicial efficiency and avoid crowding the court’s
docket with frivolous actions.
Bautista v. Star Cruises, 696 F. Supp. 2d 1274, 1281 (S.D. Fla. 2010) (internal citations
omitted). We are particularly cognizant of the following admonition from the United
States Court of Appeals for the Fourth Circuit: “The system can provide no harbor for
clever devices to divert the search, mislead opposing counsel or the court, or cover up
that which is necessary for justice in the end.” United States v. Shaffer Equip. Co., 11 F.3d
450, 457-58 (4th Cir. 1993).
With those principles in mind, and after careful and deliberate consideration, the
Court reluctantly concludes that it cannot ignore Mr. Cuker’s conduct in this case.
Indeed, as much as the Court and the government both wasted an inordinate amount of
time discovering and deciphering facts that should never have been obscured, the Court
is troubled the most, by far, about the impact of Mr. Cuker’s handling of this matter on
the Pennas themselves. Would the sale of the Penna Property have been successful had
the Pennas been counseled differently – i.e., to promptly accept the purchase offer and
to provide any environmental disclosures (if necessary) simultaneously with that
acceptance? Was Mr. Cuker concerned about how a successful sale would impact the
viability of this case that had been pending since 2016 (and did any such concerns create
a conflict)? What is the likelihood that this litigation would have ended differently but
for the Stipulation that Mr. Cuker was all but compelled to negotiate with the
government? If the government had been provided with all of the documentation
during discovery, would a tougher deposition of Mr. Penna (and possibly Plaintiffs’
experts) have convinced the Pennas that they should abandon their case, or, perhaps, at
least modify their takings and damages theories (and/or trial strategy)? Would the
government have improved their chances for at least partial summary judgment and
possibly have avoided the expense of trial imposed on both parties? These are all
questions the answers to which are unknowable, but they illustrate the harm to the
Pennas, at a minimum. The harm to the government and the Court is apparent.
The Court’s authority to impose sanctions given the above findings is clear:
Many courts, including the U.S. Supreme Court, the U.S.
Court of Appeals for the Federal Circuit, and the U.S. Court
of Federal Claims, have held that “[a]ll judicial bodies
inherently have the power to sanction parties, or their
attorneys, for failure to conform to their rules or to respect
their dignity, or for unnecessarily impeding the tribunals'
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business.” Tecom, Inc. v. United States, 2006 WL 5616336, *5
(Fed. Cl. May 4, 2006); see also In re Bailey, 182 F.3d 860, 864,
864 n. 4 (Fed. Cir. 1999) (citing inter alia Chambers v. NASCO,
Inc., 501 U.S. 32, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991), and
explaining that “[t]he United States Supreme Court and
federal courts of appeals have repeatedly recognized that
regulation of attorney behavior is an inherent power of any
court of law and falls within the discretion of such court”).
Multiservice Joint Venture, LLC v. United States, 85 Fed. Cl. 106, 112 (2008) (explaining
that “[t]his Court’s inherent authority to enter sanctions is embodied in [RCFC 11]
(requiring a reasonable inquiry into statements alleged in papers filed), RCFC 16(f)
(authorizing sanctions for violations of pretrial orders), RCFC 37 (authorizing sanctions
for failure to cooperate during discovery), and 28 U.S.C. § 1927 (allowing the Court to
impose costs upon any attorney who ‘multiplies the proceedings in any case
unreasonably and vexatiously’)”), aff’d, 374 F. App’x 963 (Fed. Cir. 2010); see also RCFC
26(a)(1)(A), RCFC 26(e). “Although the language of RCFC 37(b) would suggest that a
violation of a judicial order is necessary before imposing sanctions, ‘a formal, written
order is not required, where a litigant engages in abusive litigation practices.’”
Multiservice Joint Venture, 85 Fed. Cl. at 112–13 (quoting Dotson v. Bravo, 202 F.R.D. 559,
570 n.68 (N.D. Ill. 2001), aff’d, 321 F.3d 663 (7th Cir. 2003)). Moreover, although the
Court finds that both parties were harmed by the discovery violation, “[t]he Court does
not merely have the inherent authority to sanction conduct designed to harm a party,
but also to sanction conduct that delays and disrupts the judicial process.” Precision
Pine and Timber, Inc. v. United States, 2001 WL 1819224, *4 (Fed. Cl. Mar. 6, 2001).
All of that said, the government declines to press the duty of candor issue, see
Def. 52(c) Mot. at 44, and thus the Court similarly does not reach that issue here. On the
other hand, the government does seek sanctions for the discovery violation. Id. at 49.
The Court agrees with the government that imposition of sanctions is warranted for the
discovery violation,54 and that Mr. Cuker’s overall conduct may be taken into
54The Court agrees with the government that while Mr. Cuker apologizes for the discovery
violation on behalf of Plaintiffs, Mr. Cuker makes no attempt to “demonstrate in their brief why
their failure to disclose all of the documents . . . is not a discovery violation or why their failure
was substantially justified.” Def. Rep. at 23–24. The Court further agrees that Plaintiffs instead
improperly attempt to “place the blame on the United States for failing to ask for something it
did not know existed.” Id. at 24. Indeed, the government correctly explained that “Plaintiffs
had superior knowledge of what transpired during the 2018 negotiations, and they perpetuated
that knowledge gap by failing to answer interrogatory questions, by failing to produce
documents, and by misstating the facts of the negotiations.” Id. Mr. Cuker’s argument that the
government should have policed his work better does not come close to qualifying as a
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consideration in fashioning such sanctions. See, e.g., Monsanto Co. v. E.I. Du Pont de
Nemours & Co., 748 F.3d 1189, 1201 (Fed. Cir. 2014) (holding that “the district court
properly exercised its discretion in imposing targeted sanctions by carefully fitting its
sanctions to the conduct that it found to be improper”); see also Adana Investing, Inc. v.
Wells Fargo Bank, N.A., 2017 WL 3668553, at *2 (S.D. Fla. Apr. 10, 2017) (“Based on the
Court’s review of Defendants’ overall conduct throughout litigation, the Court finds
sanctions are warranted.” (emphasis added)); Grethen v. Clarke, 2015 WL 13387681, at *8
(E.D. Va. Nov. 24, 2015) (finding “that the sanction of dismissal is the only appropriate
sanction given Plaintiff’s overall conduct in this litigation” (emphasis added)), aff’d, 672
F. App’x 300 (4th Cir. 2017); Lyell Theatre Corp. v. Loews Corp., 91 F.R.D. 97, 99 (W.D.N.Y.
1981) (“The court should look to the overall conduct of the litigation before imposing any
sanction. . . . ” (emphasis added)), aff’d, 682 F.2d 37 (2d Cir. 1982). Accordingly, the
Court orders Mr. Cuker to reimburse the government for attorney’s fees, costs, and
expenses arising from the time its counsel was forced to spend on: (1) reviewing the
documentation Plaintiffs provided to the government during trial as a result of the
Court’s order to do so; (2) negotiating and preparing the resulting Stipulation to
mitigate any prejudice to the government; and (3) preparing and filing the
government’s responses (in its RCFC 52(c) motion) to the Court’s questions contained in
its August 10, 2020 order. 55
In addition, the Court finds that an adverse inference is warranted. Plaintiffs
seek to avoid the results of the Stipulation, arguing that even though “the sale ‘did not
fail because of environmental issues[,]’” that “does not mean that a sale for $725,000
could have succeeded in spite of environmental issues.” Pl. Resp. at 10 (emphasis in
original). The Court will not permit Plaintiffs to now argue that the Court should infer
that the sale ultimately may have failed anyhow as a result of the contamination. Given
Plaintiffs’ failure to disclose responsive documents consistent with this Court’s
discovery rules, and the resulting Stipulation, the government is entitled to an adverse
inference that the sale did not fail – and would not have failed – due to environmental
concerns. Plaintiffs cannot be permitted to avoid the implication of the Stipulation.
Moreover, such an adverse inference is consistent with Mr. Cuker’s admission that the
documentary evidence produced during discovery “disclosed problems with zoning
and liens which could have caused the deal to fail” – thus undercutting the notion that
substantial justification for the prejudicial discovery violation. Council for Tribal Emp. Rts. v.
United States, 110 Fed. Cl. 244, 250 (2013) (sanctioning the government where it “had no
substantial justification for its categorical refusal to respond . . . [to] discovery requests”).
55Although the Court would be justified in permitting the government to seek costs for specific
depositions that may have been less than fully productive or helpful due to the previously
undisclosed documents, the Court believes that the sanction delineated herein is sufficient to
deter future such conduct and, in the process, to protect the public and the Court.
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any contamination somehow was the sole or “but for” cause of the Pennas’ putative
inability to sell their Property. Pl. Resp. at 40.56 To be clear, the Court does not rely
upon the adverse inference in granting the government’s RCFC 52(c) motion, but
nevertheless issues this adverse inference sanction for the sake of the completeness of
the record in this case.
Because Mr. Cuker, “[and] not his client, was responsible for the untimely
discovery . . . ,” Mr. Cuker shall “pay the sanctions himself rather than passing the
sanctions on to his client.” Canvs Corp. v. United States, 104 Fed. Cl. 727, 734 (2012)
(citing cases). “The value of the attorney’s fees will be measured by the reasonable
number of hours worked multiplied by the prevailing market rates, that is ‘those
prevailing in the community for similar services by lawyers of reasonably comparable
skill, experience, and reputation.’” Id. (quoting Pac. Gas & Elec. Co. v. United States, 82
Fed.Cl. 474, 487–88 (2008)); see also Multiservice Joint Venture, 374 F. App’x. at 966. The
sanctions assessed represent the Court’s attempt to compensate the government “for
losses sustained due to [the] discovery violations, . . . and to deter other litigants from
engaging in similar discovery abuses.” SynQor, Inc. v. Artesyn Techs., Inc., 709 F.3d 1365,
1386 (Fed. Cir. 2013) (applying regional circuit law, and noting that “[t]he sanctions
awarded bear a ‘reasonable relationship’ to the harm that occurred, and serve as a
deterrent against similar discovery violations by future litigants” (citing BMW of N. Am.
v. Gore, 517 U.S. 559, 580–81 (1996))); see also K-Con Bldg. Sys., Inc. v. United States, 106
Fed. Cl. 652, 663 (2012) (holding that “the court has even greater discretion to award
costs than it does to award the default sanction because the former is not limited to
discovery violations that lack substantial justification or cause harm to the opposing
party”).
The government and Mr. Cuker shall endeavor to stipulate to the awarded costs,
expenses, attorney’s fees, and a payment schedule (if warranted), and, if they so agree,
shall file a joint statement listing the amount of such items with the court no later than
April 6, 2021. In the event that the government and Mr. Cuker are unable to agree, the
government shall file with the court a bill of their costs, expenses, and attorney’s fees,
together with any necessary explanation or supporting documentation, on or before
April 9, 2021. Mr. Cuker shall then file his response no later than April 23, 2021.
* ** **
56See also Def. Rep. at 5 (“The stipulation removes environmental contamination as a basis for
withdrawal of the 2018 offer, and it undermines Plaintiffs’ and their experts’ claim that the
property could not be sold.”).
- 52 -
The Court has great sympathy for the Pennas’ overall situation. And while no
reasonable property owner would be pleased to learn that their land may be
contaminated with potentially harmful chemicals, Plaintiffs’ evidence simply does not
support the claim that they have suffered a compensable taking. That is particularly
true where, as here, there is almost no evidence demonstrating any actual impact of
PFOS and PFOA on human health, no credible evidence demonstrating that the
Property cannot be sold, and no evidence of negative environmental stigma impacting
the Property’s valuation. Indeed, at least one of Plaintiffs’ exhibits, admitted into
evidence, notes that the “EPA is working to improve its understanding of the
prevalence and toxicity of these chemicals to determine if safe drinking water
regulatory limits are needed” and that “[i]t is not possible to link exposure to PFOS and
PFOA in water to a person’s individual health issues.” PX 29 (emphasis added)
(explaining that “PFOS, PFOA . . . are unregulated contaminants that are being sampled
for the first time in Public Water Systems” (emphasis added)). The Court recognizes
that the science and the regulatory environment may well be evolving towards
Plaintiffs’ view of the contamination, 57 but the evidence presented to the Court during
trial is very far from what is required to recover on their takings claim. At best, on this
record, the Pennas’ “claims against the government are moral, not legal.” Calvin v.
United States, 63 Fed. Cl. 468, 475 (2005).
VII. CONCLUSION
For the above reasons, the Pennas have failed to prove a compensable taking under
the Fifth Amendment and, accordingly, the government’s RCFC 52(c) motion for
judgment on partial findings is GRANTED. Following a determination of fees, costs,
and expenses, an appropriate order will be entered in this matter, instructing the Clerk
to enter judgment for defendant, the United States.
It is so ORDERED.
s/ Matthew H. Solomson
Matthew H. Solomson
Judge
57S. Boxerman, B. Bolen and M. Morales, Cos. Should Brace For More EPA Action On PFAS Under
Biden, Law360.com (Mar. 12, 2021), available at
https://www.sidley.com/en/insights/publications/2021/03/cos-should-brace-for-more-epa-
action-on-pfas-under-biden (last accessed Mar. 15, 2021).
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