CHESAPEAKE — A golf course built on 1.5 million tons of coal ash that loses $100,000 a month and is a magnet for headlines about potential environmental contamination might not seem like a property to covet.
Yet for three years, a bitter legal brawl that reached the Supreme Court of Virginia a year ago has unfolded over the ownership of the 216-acre Battlefield Golf Club in Chesapeake, crafted out of fly ash from Dominion Virginia Power’s Chesapeake Energy Center from 2002 to 2007.
And the utility itself now could be drawn directly into the fight.
A document filed last week in a lawsuit over ownership of the golf course claims that Dominion — which has spent millions bankrolling much of Battlefield’s maintenance, operations and legal fees — engaged in a “conspiracy” to prevent the property from changing hands in an attempt to avoid cleaning up the site.
The allegations were included in an amended complaint filed by Neil Wallace and his Williamsburg-based business Combustion Products Management Virginia, which struck a deal in 2002 with Dominion to use the ash to build the 18-hole course on Centerville Turnpike. The motion to amend the complaint must be approved by the court before Dominion and others can be added as parties to the lawsuit, as Wallace seeks.
In 2006, before the golf course was finished, Wallace signed a contract with MJM Golf LLC to transfer ownership to the group of local businessmen. But Wallace maintains the contract contained a buy-back option if MJM failed to pay the full $700,000 asking price by Jan. 1, 2013.
“We were having some problems,” Wallace said. “I had been paid to take the ash. ... I really wasn’t interested in owning and operating the golf course.”
Wallace sued MJM in 2013 to regain ownership, saying he and others were misled by Dominion’s promises that the ash posed no risks to groundwater, human health or neighboring homes and that the controversy over potential contamination from the site, including lawsuits filed against him, Dominion and other parties on behalf of hundreds of neighbors, devastated his business.
“Who would want a golf course that has a half a billion dollar environmental liability and is losing $100,000 a month?” Wallace said. “If I buy it, I can shut it down and force them to remediate it. ... Had they told me about the risk of building that golf course I wouldn’t have done it. They knew there were significant risks.”
Dominion has been providing as much as $1 million a year or more to cover losses for the struggling golf course, according to depositions in the lawsuit. Robert Richardson, a Dominion spokesman, said that figure is roughly accurate.
The litigation has stunted development of the course, Richardson said, calling the contribution “Dominion’s way of being a good neighbor and trying to do the right thing.”
Wallace says that if he succeeds, he expects to make some money performing some of the remediation work.
He is also, in effect, seeking to buy another lawsuit, since regaining ownership would allow him to go after Dominion for what he claims was the company’s misleading marketing of the safety of using the ash and failing to treat it properly before using it to build the course.
“The golf course in question was sculpted out of 1,500,000 tons of toxic coal ash provided by Dominion pursuant to contract between Dominion and CPM, as well as others,” the lawsuit states. “Because the material provided was not inert pursuant to the terms of its separate contract with Dominion, that Dominion and others are in breach and are liable for damages for cleaning and remediating the site, anticipated to cost in excess of $750,000,000.”
Wallace’s lawyer, Richard S. Phillips, says the $750 million figure is an “extrapolation” from an assessment provided several years ago by an engineer.
In a case that was ultimately dismissed, Wallace also sued Dominion in 2012 over kidney cancer he claimed was related to his work with the coal ash.
“I’m doing this for money. I’m also doing it because my business was destroyed,” Wallace said.
Dominion spokesman David Botkins said the company would not comment on “this meritless lawsuit.” He said the federal Environmental Protection Agency, the Virginia Department of Environmental Quality and outside consultants “have found no issues with the golf course.”
Botkins added that “Dominion is a good corporate citizen and is committed to ensuring that the golf course remains compliant with regulations and succeeds as a business.”
After Wallace sued, MJM, the entity that owned the golf course, filed a counterclaim, alleging Wallace’s company had failed to adequately cover the ash with topsoil, which required the new owners, with money supplied by Dominion, to spend $2 million to buy, transport and place the dirt.
When the Chesapeake Circuit Court later awarded MJM more than $694,000 in damages, Wallace appealed.
The Virginia Supreme Court reversed the decision last year, finding that the contract held MJM responsible for the final soil cover. The court remanded the case for additional proceedings on “the alleged buy-back option,” the opinion says.
For Wallace, that meant the only matter left to settle was the price of the property.
Instead, in February, lawyers for MJM launched an attempt to assert a claim for “equitable redemption” and had $1.2 million, allegedly fronted by Dominion, at the ready to pay Wallace so they could keep the golf course.
Wallace refused and the circuit court determined the claim did not apply to the case. Faced with the prospect of having to sell him the property, what happened next was a maneuver that Wallace calls a bald-faced attempt to thwart his claim to the golf course.
Early this year, the golf course was transferred to another entity called 3G Real Estate Holdings, LLC, via a foreclosure sale, which the court allowed to proceed.
“MJM cannot perform because it does not own the property,” MJM attorney Richard H. Matthews told Judge Randall D. Smith in court last week, arguing that the case should be dismissed because the property was now owned by 3G.
That foreclosure sale was a “sham,” orchestrated after a Norfolk lawyer named Robert Roussos “reached an agreement with representatives of Dominion to cheat CPM out of its property rights” by forming 3G, which at one time shared a business address with MJM and still includes the same people, Wallace and his lawyer maintain.
“It went to 3G. We knew it would go to Dominion or a surrogate of Dominion and it went to a surrogate of Dominion,” Phillips, Wallace’s lawyer, told the court. “We know from discovery that the people involved in this collusion, this conspiracy, include MJM. ... It just doesn’t get past the nose.”
According to the deposition of J. Mark Sawyers, a former managing member of MJM who was also involved in the formation of 3G, Dominion provided the money that allowed 3G to buy the mortgage for the golf course. Asked if the foreclosure was intended to “wipe out CPM’s right” to buy back the golf course, Sawyer said, “Yes, I understood that.”
After the hearing last week, during which the judge delayed ruling, Roussos asked a reporter to call his office for comment. He did not return a subsequent call.
“I don’t think that there’s any validity to any position CPM has taken in any litigation filed to date,” said Matthews, the MJM attorney. “We expect the ultimate decision of the court to validate that assertion.”
In 2012, the city of Chesapeake required the golf course to post notice to golfers that the site contains fly ash.
That was a year after the City Council passed a resolution calling the fly ash “a public nuisance” that should be “remediated and/or removed.” The resolution referenced a report by an independent city consultant that found that the ash is “leaching contaminants into the groundwater and that these contaminants are likely to migrate off-site.”
Since then, the same consultant’s review of the data from monitoring wells shows the initial projections were “gloomier than what the data’s been showing,” said J. Bryan Plumee, Chesapeake’s outside environmental counsel. A boundary ditch on the southern edge of the property appears to be keeping contaminants from moving, he added.
Despite opening to the public nearly a decade ago, the course has no clubhouse or other structures because the city will not issue permits.
“Because of the potential for contamination from the fly ash, the city cannot approve a final site plan for the operation until a remediation plan is submitted and approved by the city,” Chesapeake spokesman Mark Cox said.
Since 2010, the golf course has also been subject to a monitoring program overseen by the Virginia Department of Environmental Quality. Dominion monitors samples from 19 groundwater wells quarterly and submits the results to DEQ as well as an annual report.
DEQ spokesman Bill Hayden said a review of those numbers conducted this year “concluded that some contaminant levels are increasing and some are decreasing in shallow and deep layers of the coal ash used at the golf course.”
Those contaminants include heavy metals frequently found in coal ash, which can contain arsenic, mercury, lead, selenium and others, though Hayden said DEQ does not anticipate migration of metals in groundwater.
“We do continue to monitor to make sure no problem develops,” Hayden said. “We expect that it’s pretty much going to stay in place.”
When the course was built, regulations did not require DEQ approval to use coal ash, though DEQ did review the project and had “no problems with it,” Hayden said. Asked if DEQ believes the site needs to be cleaned up, Hayden referred to the groundwater monitoring and said the agency will have “ongoing information about where potential contamination lies.”
“Under those circumstances, digging the golf course up and then disposing of the coal ash could do more harm than good,” he said.
The federal Environmental Protection Agency in 2010 found that metals were not migrating from the course to drinking water wells and pronounced that “there is no evidence that there is a threat to the public or the environment from the fly ash at the golf course.” An EPA spokesman said last week that the agency is not contemplating any additional action there, noting that connecting residents who used private wells to public water “mitigated any potential threat to drinking water.”
In 2008, Dominion committed up to $6 million to connect residents to municipal water, just before lawsuits were filed on behalf of several hundred residents alleging the ash from the course had contaminated drinking-water wells. Many of those cases have been dismissed, some have been refiled and some are still pending.