Free Status Report - District Court of Federal Claims - federal

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS ) ) ) ) ) ) ) ) ) ) )

CAROL AND ROBERT TESTWUIDE, et al., Plaintiffs, v. THE UNITED STATES OF AMERICA, Defendant.

No.: 01-201L (Honorable Victor J. Wolski)

STATUS REPORT BY PLAINTIFFS Plaintiffs regret to advise the Court that the Government has demanded material alterations to the settlement agreed to on October 17, 2006 the effect of which, and probably the intention of which, is to renege on the settlement. Counsel for the parties entered into a conditional settlement agreement on October 17, 2006 which contained all the essential and material terms of the agreement. Immediately following that agreement the Government's counsel, Steven Bryant, advised Plaintiffs that his supervisor in the Environmental and Natural Resources Division had approved the settlement and that he was awaiting only the approval of the Assistant Attorney General in charge of that division which approval was "pro forma" and a "99 percent certainty". Following that discussion, counsel for both sides called this Court, announced the agreement, and suggested that the trial be postponed. The Court agreed and also scheduled a status report to the Court in approximately 90 days to give Plaintiffs' Counsel time to secure approval by the Plaintiffs. The settlement was for a lump sum payment by the Defendant of $38 million which would settle all of the pending cases. A summary of the terms are set out in Exhibit 1 which was

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emailed by Plaintiffs' Counsel to the Defendant on October 18, 2006 and again on October 19, 2006. No objection was ever made to those terms until December 7, 2006. The "conditional" nature of the settlement was due to the fact that Plaintiffs' Counsel was required to accomplish three conditions before the settlement was final. Following October 17, 2006, Plaintiffs accomplished all of the conditions required by the agreement: 1. By October 19, 2006, Plaintiffs' Counsel secured the agreement of each of the twelve Test Case Plaintiffs to accept specific sums (calculated as described below) in settlement of their individual claims and immediately informed the Government. (Exhibit 2) 2. Within the 90 days provided in the Court's schedule, Plaintiffs' Counsel expended more than 1400 hours and substantial out of pocket sums and secured the acceptance of the settlement: a. b. by more than 96% of all Plaintiffs; and by more than 98% of those Plaintiffs whose properties were in a high noise zone. Each accepting Plaintiff agreed to a specific settlement figure recommended by Plaintiffs' Counsel for each property calculated by using (1) the $38 million lump sum; (2) each property's 2000 tax assessment; and (3) each property's noise zone. On December 7, 2006 ­ when Plaintiffs' Counsel were close to securing the required percentages ­ the Government made a completely new demand which would alter the terms and nature of the settlement. The new demand by the Government (Exhibit 3) bore little relationship to the agreement of October 17, 2006. The part of the new demand that virtually guaranteed that the settlement would be vitiated was that those Plaintiffs who had sold their homes after the date

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of taking (July 1, 1999) should not be paid the specific settlement figure each had accepted but rather should only receive an unspecified smaller portion of that figure thus completely changing the $38 million settlement figure. The ostensible rationale for the reduction demanded was the known and obvious fact that Plaintiffs who had sold their properties after the date of taking could not presently convey an easement which included future aircraft or increased future noise. Counsel for both parties had discussed on at least two occasions prior to the October 17 settlement the fact that only Plaintiffs who still owned the property could legally convey an easement. Plaintiffs who had sold their property after the date of taking could only give a dismissal with prejudice and a release reflecting that the Government had taken an easement on July 1, 1999. Exactly that approach had been taken by the parties in Argent v. United States 124, F.3d 1277 (Fed. Cir. 1997) an avigation takings case which settled after the Court of Appeals decided the case in favor of the Plaintiffs. In making its December 7, 2006 demand for an alteration of the agreement the Government affected to be surprised that a substantial percentage of Plaintiffs had sold their homes in the more than seven years since July 1, 1999. Plaintiffs intend to file a Motion to Enforce the Settlement accompanied by extensive affidavits detailing the course of negotiations and the communication between the parties. Plaintiffs request that a factual hearing be scheduled on the terms and enforceability of the October 17, 2006 settlement. Plaintiffs expect that at that hearing witnesses, including counsel for Plaintiffs and Defendants, and several executives (or former executives) of the Department of Justice and the Navy, will testify and that the pertinent documents will be introduced. Plaintiffs may also request a short period of limited discovery.

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Plaintiffs also request that the Court immediately issue its memorandum denying the Government's Motion for Summary Judgment which was withheld by the Court at the request of the Government on October 17, 2006. Although there is not a single integrated document signed by both parties, Plaintiffs assert and will establish a substantial documentary basis for the essential terms as well as supporting testimonial evidence. Tiburzi v. Dept. of Justice, 269 F.3d 1346, 1348 (Fed. Cir. 2001). An evidentiary hearing is the best and indeed the only fair way to resolve the dispute over the settlement. Wang Labs, Inc. v. Applied Computer Sciences, Inc., 958 F.2d 355 (Fed.Cir. 1992); Milner v. Norfolk & Western Ry Co., 643 F.2d 1005, 1009 (4th Cir 1981); Callie v. Near, 829 F.2d 888, 890-01 (9th Cir. 1987). At the Government's request Plaintiffs' Counsel forwarded an earlier draft of the present Status Report to the Government. In response the Government took issue with placing the terms of the October settlement before the Court pursuant to Fed. R. Evid. 408 and announced that it will or may seek the recusal of this Court. (Exhibit 4) Plaintiffs believe that introducing the terms of the settlement which they intend to enforce (and the circumstances surrounding the settlement) is not only necessary but is the only rational way to proceed. In addition, Plaintiffs believe that Rule 408, as a rule of evidence, has absolutely no bearing on this Court's ability or duty to sit on this case and that the Government's position is supported neither by precedent nor common sense. Nevertheless, Plaintiffs feel compelled to advise the Court of the Government's intentions in this respect.

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Respectfully submitted,

/s/ Jack E. Ferrebee __ Jack E. Ferrebee Hofheimer/Ferrebee, P.C. 1060 Laskin Road, Suite 12-B Virginia Beach, Virginia 23451 (757) 425-5200 [email protected] Counsel of Record for Plaintiffs

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Of Counsel: Kieron F. Quinn Martin E. Wolf Quinn, Gordon & Wolf, Chtd. 102 W. Pennsylvania Avenue Suite 402 Towson, Maryland 21204 (410) 825-2300 [email protected] [email protected] Charles R. Hofheimer Kristen D. Hofheimer Hofheimer/Ferrebee, P.C. 1060 Laskin Road, Suite 12-B Virginia Beach, Virginia 23451 (757) 425-5200 [email protected] [email protected] Thomas Shuttleworth Stephen C. Swain Lawrence Woodward Charles B. Lustig Shuttleworth, Ruloff, Giordano & Swain 4525 South Blvd., Suite 300 Virginia Beach, Virginia 23452 (757) 671-6000 [email protected] [email protected] [email protected] [email protected]

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