September 12, 2001
Appeal of
JOHN J. KOUTSOS
PETER J. KOUTSOS
APPEARANCE FOR APPELLANTS:
Peter J. Koutsos
APPEARANCE FOR RESPONDENT:
Helen A. Nicholas, Esq.
Appellants, Peter J. and John J. Koutsos, leased property in York, Pennsylvania, to Respondent, United States Postal Service. Respondent failed to vacate the premises upon the expiration of the lease, and in Peter J. Koutsos, John J. Koutsos and George Koutsos, PSBCA No. 4114, 99-2 BCA ¶ 30,392, the Board awarded Appellants the rental value of the premises from the expiration of the lease until the premises were available for Appellants' use. In arguing that case, Appellants raised for the first time a claim for the diminished value of the property allegedly resulting from contamination of the site caused by Respondent and from Respondent’s failure to provide assurance from the Pennsylvania Department of Environmental Protection that the site was free of contamination. The Board dismissed that claim, as it had not been submitted to the contracting officer. (Id. at 150,243).
The “diminished value” claim was subsequently submitted to the contracting officer and denied, and Appellants have appealed that denial. At the parties' election, this appeal was submitted on the record without an oral hearing. The parties have submitted evidence and briefs in support of their positions. By agreement of the parties, the documents in the record of PSBCA No. 4114 were made part of the record for this appeal. Only entitlement is at issue.
FINDINGS OF FACT
1. In 1987, Respondent leased from the then owners real property in York, Pennsylvania for use as a carrier annex and vehicle maintenance facility (Appeal File, Tab (“AF”) 18).
2. Appellants succeeded to the interest of the lessor, purchasing the property in 1990 for $600,000. The term of the lease was eventually extended to December 31, 1993. (AF 17; Lease Addendum attached to Complaint in PSBCA No. 4114; Respondent’s Exhibit (“RX”) D).
3. Before 1991, Respondent removed two 5,000-gallon gasoline underground storage tanks from Appellants’ property (Appellants’ Exhibits (“AX”) 3, 6; AF 12 (p. 1 and Figure 2), 13; Appellants’ Appeal File 3; RX C).
4. On February 15, 1995, the parties entered into a Restoration Agreement for the property. The agreement recited that the lease had terminated effective December 31, 1993, and that the lessor had requested restoration under the terms of the lease. The parties agreed,
“THEREFORE, in consideration of a one time lump sum payment of Two hundred fifty thousand ($250,000), the Lessor hereby releases the Postal Service from any past, present or future restoration claims in regard to said lease agreement. Payment shall be made within thirty (30) days of Acceptance of this restoration agreement by the Postal Service Contracting Officer. In addition, the United States Postal Service will provide for the closure of a 550 gallon waste oil tank and 8,000 gallon gasoline storage tank at the York, Pennsylvania Carrier Annex and Vehiclel [sic] Maintenance Facility (VMF) per Pennsylvania Department of Environmental Resources (PADER) requirements.” (AF 17).[1]
5. On or about April 14, 1995, Respondent’s contractor excavated and removed the 550-gallon waste oil tank referred to in the Restoration Agreement (AF 2, 4, 12, 14, 16).
6. The soil around and under the 550-gallon tank had become contaminated, and Respondent’s contractor also excavated and removed from the site 95.72 tons of contaminated soil, and the excavation was backfilled and the blacktop paving restored (AF 2, 4, 12-16).
7. The Pennsylvania Department of Environmental Protection (“PADEP”) required a site “characterization” (study) to determine the extent of petroleum hydrocarbon contamination of the soil and groundwater. Respondent’s environmental engineering consultant/contractor performed four borings and subsequently installed groundwater-monitoring wells in three of the borings, a standard procedure to test for contamination. One of the monitoring wells was in the area where the two 5000-gallon gasoline tanks had been removed before 1991 (Finding 3). (AF 12).
8. After concluding the study, Respondent’s environmental consultant recommended that no further remediation or investigation of the soils was necessary and that additional groundwater samples be analyzed to confirm that the groundwater met the applicable environmental standards. PADEP reviewed the site characterization report and concurred with the consultant’s recommendations. (AF 11, 12).
9. Based on its analysis of the groundwater samples, Respondent’s environmental consultant concluded that there was no significant impact to the groundwater at the site and recommended that the monitoring wells be abandoned. The concentrations of petroleum products in the groundwater were either below laboratory detection levels or well below the levels allowed by PADEP standards. (AF 4, 9).
10. Upon reviewing the consultant’s groundwater analysis and recommendations, PADEP, by letter dated January 25, 1997, advised that it was requiring no further action regarding the site. The letter noted, “This should not, however, be construed as a waiver of liability for any current or future problems that exist at the site.” This type of letter from PADEP indicated that the cleanup was completed to its satisfaction. A copy of the PADEP letter was provided to Appellants in January or February 1997. (AF 4, 6, 8).
11. In January of 1999, Appellants entered into an agreement to sell the property in an “as is” condition for the amount of $225,000, but the sale was never closed (Complaint Exhibit F).
12. By letter dated December 20, 1999, Appellants submitted a certified claim to the contracting officer seeking $375,000 as the diminished value of the property. The claim did not identify specific acts of Respondent that Appellants contended formed the basis for the claim. (Complaint Exhibit B).
13. By final decision dated April 4, 2000, the contracting officer denied Appellants’ claim for diminished value of the property, contending that the property was not contaminated (AF 1).
14. On April 11, 2000, Appellant filed a Notice of Appeal from the contracting officer’s final decision.
DECISION
Appellants argue that they are entitled to recover damages for the diminished value of their property, which they claim resulted from Respondent’s contamination of the site and its failure to perform the closure of underground storage tanks on Appellants’ premises as required by the Restoration Agreement. The claim fails for a number of reasons. First, Appellants have failed to contradict Respondent’s persuasive evidence that the property has been satisfactorily remediated (Findings 6-10). Accordingly, Appellants having failed to demonstrate that their property is contaminated, there is no basis for finding Respondent liable for any damages based on the alleged contamination of the property. See Cacciatore v. Mobil Oil Corp., No. 98 CV 4727, 2000 U.S. Dist. LEXIS 11550 (*22-*24) (N.D. Ill., July 25, 2000).
Second, Appellants have not shown that Respondent failed to close the tanks as required by the Restoration Agreement. Appellants argue that the reference in the Restoration Agreement to closure of an 8000-gallon gasoline storage tank was intended to obligate Respondent to effect official closure of the two 5000-gallon gasoline storage tanks removed before 1991 (Finding 3). In PSBCA No. 4114, based on the evidence submitted by both parties in that appeal, the Board found that the reference in the Restoration Agreement to the 8000-gallon gasoline tank was a mistaken reference to a tank on Respondent’s adjoining property that was removed at the same time the 550-gallon waste oil tank was removed from Appellants’ premises. Peter J. Koutsos, John J. Koutsos and George Koutsos, PSBCA No. 4114, 99‑2 BCA ¶ 30,392, n.3. Under principles of collateral estoppel, that determination, necessary to the Board’s conclusion that Respondent had satisfied the requirements of the Restoration Agreement (Id. at 150,242-243), is binding, and Appellant is precluded from now arguing that the reference was to the two gasoline tanks removed before 1991. See Paul A. Mason, PSBCA No. 1335, March 7, 1985, citing Montana v. United States, 440 U.S. 147, 153 (1979):
“Under collateral estoppel, once an issue is actually and necessarily determined by a court of competent jurisdiction, that determination is conclusive in subsequent suits based on a different cause of action involving a party to the prior litigation.”
Therefore, the only tank on Appellants’ property that was covered by the Restoration Agreement was the 550-gallon waste oil tank, and that tank was closed per PADEP requirements (Findings 4-10).[2]
Finally, Appellants have failed to show that any actions or inaction of Respondent caused their property to be less valuable than it otherwise would have been. They submitted no appraisals or other evidence regarding what the value of the property would have been but for Respondent’s actions. Cf. San Nicolas v. United States, 223 Ct. Cl. 223, 236, 617 F.2d 246, 253 (1980). Simply pointing to the difference between Appellants’ purchase price in 1990 and the price they were offered in 1999 does not establish that the value of the property had diminished due to Respondent’s conduct. Although quantum is not in issue and detailed proof of any diminution of value would not be expected, Appellants are not excused from establishing that there was a cause-and-effect relationship between Respondent’s alleged failures and some diminished value of the property.[3] The Polote Corp., PSBCA Nos. 1297, 1428, 87-1 BCA ¶ 19,490 at 98,497, citing Montgomery-Ross-Fisher, Inc., PSBCA Nos. 1033, 1096, 84-2 BCA ¶ 17,492 at 87,123. Thus, Appellants are not entitled to recover because they have failed to show that they incurred any damage (diminished value) related to Respondent’s conduct.
The appeal is denied.
Norman D. Menegat
Administrative Judge
Board Member
I concur:
James A. Cohen
Administrative Judge
[1] The Pennsylvania Department of Environmental Resources was renamed the Pennsylvania Department of Environmental Protection (AF 13).
[2] Nonetheless, there is no evidence that the previous removal of the two 5000-gallon tanks (Finding 3) caused contamination or in any way diminished the value of the property.
[3] Appellants argue in their brief, “One can certainly understand that a prospective purchaser would be very leery in purchasing property in which there were storage tanks on the Property and no closure to two gasoline tanks.” It is Appellants’ burden to establish by evidence each element of their claim. See Sub-Haulers Interstate Service, PSBCA No. 4327, 00-1 BCA ¶ 30,767; Lancor Engineering, Inc., PSBCA No. 3948, 97-2 BCA ¶ 29,007. Appellants do not meet that burden by inviting the Board to speculate on the impact any condition might have on a prospective purchaser.