(CN) - A Virginia building materials company claims in court that its expansion plans have been stymied by the seller of a parcel of land who failed to disclose the property is polluted with hazardous waste.
In a complaint filed in the federal court in Norfolk, Virginia, the Roanoke Cement Company says that in the late 1990s, after operating a successful cement terminal on the southern branch of the Elizabeth River for several years, its predecessor company began to look for opportunities for expansion.
The easiest option, it thought, was to purchase a property directly next to its existing facility, which is located in the City of Chesapeake, Virginia, and was owned at the time by defendant Chesapeake Products Inc., a fertilizer manufacturer. The closing on the property took place in 2001.
But that's when things got complicated, the Dec. 13 complaint says.
Roanoke Cement says throughout the negotiations of the sale, Chesapeake Products assured it the property was in compliance with all federal and state environmental regulations and local building codes.
It claims at all times Chesapeake Products maintained the property contained no hazardous waste or toxic substances, aside from those identified in an environmental report prepared in 1999.
As described in the complaint, the deal was premised on Chesapeake Products continuing to us the property for a set period, and included provisions requiring it to maintain the property and repair any structural issues with its building.
Roanoke Cement says the contract also included a provision that stated should Chesapeake Products ceases business operations on the property, the company would remove any and all remaining structures, with Roanoke would reimbursing it for the demolition costs.
After the sale closed, Chesapeake Products vacated the property and abandoned its business operations, leaving the property in significant disrepair, the complaint says.
At this point, Roanoke Cement says, Chesapeake city officials demanded that several structures on the property be removed, and said if they weren't, the city itself would tear them down and place a lien on the land to cover the costs.
About this same time, the complaint says, Roanoke Cement learned that federal and state regulators had discovered excessive amounts of toxic chemicals on the site and high levels of arsenic, barium, cadmium, chromium, mercury and selenium, and various pesticides.
According to the the complaint, the Environmental Protection Agency demanded Chesapeake Products clean up the site, but the company refused to do so, prompting a removal action to address lead contamination. But even after a settlement and clean up, hazardous materials remained on the site, and Chesapeake Products said it did not have the money or other assets to carry out the work.
Roanoke Cement claims this shortfall was caused by Chesapeake Products' officers and directors, who it says knew they weren't going to continue the business and engaged in a scheme to "loot" the company rather than keep it solvent and meet its obligations.
Roanoke Cement says it now believes the defendants, which include Chesapeake Products, its officers and directors, and its corporate parent, Frit Industries, entered into the land sale agreement "intending not to perform and to defraud Roanoke Cement by taking and diverting the proceeds out of Chesapeake Products and leaving Chesapeake Products unable to perform."
It says as a result of these acts, not only has the value of the property declined, but storm water from the contaminated property is discharging into the Elizabeth River, a violation of the Clean Water Act.
Roanoke Cement is seeking $3.5 million in compensatory damages and $350,000 in punitive damages, a judgment declaring Chesapeake Products has violated the Clean Water Act, and orders for defendants to bring the property into compliance and remove any hazardous waste materials from the property.
It is represented by William Devine of Williams Mullen in Norfolk, Virginia, and Robert Ziogas, of Glenn, Feldmann, Darby & Goodlatte in Roanoke, Virginia.
Representatives of the defendants could not immediately be reached for comment.
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