                                            State of Vermont
                                 Superior Court—Environmental Division

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                   ENTRY REGARDING MOTION
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ANR v. Second City Prop., LLC & Second City, LLC                                   Docket No. 100-7-11 Vtec
(ANR Enforcement Emergency Order)

Title: Motion for Sanctions (Filing No. 5)
Filed: June 18, 2012
Filed By: Petitioner Agency of Natural Resources
Response: None


    X Granted                           Denied                            Other

       This matter relates back to a July 19, 2011 Stipulated Emergency Order. Respondents
have failed to comply with the July 19 Order and several more recent orders. The Court held a
hearing on the pending motion for post-judgment sanctions on August 2, 2012. This Entry
Order expresses the findings and order rendered on the record at the conclusion of the in-
person hearing.
        On October 24, 2011, the Vermont Agency of Natural Resources (ANR) petitioned the
Court for an order to show cause why Second City Property, LLC and Second City, LLC
(Respondents)1 should not be sanctioned for contempt. Following a status conference with the
parties, the Court continued the December 20, 2011 hearing on the Order to Show Cause to
allow Respondents time to complete certain activities identified in the Corrective Action Plan
(the CAP). The hearing reconvened January 23, 2012; February 10, 2012; April 25, 2012; and
August 2, 2012. The current timeline for completion of the CAP was established in our April 26,
2012 Order.
      Appearing in these proceedings for ANR is John Zaikowski, Esq. John Ruggiero,
Manager of Respondents, appeared pro se on behalf of Respondents and participated in the
December 20, 2011 hearing and the April 25 and August 2, 2012 reconvened hearings. Neither
Mr. Ruggiero nor any other representative of Respondents was present for the January 23 and
February 10 hearings.
        On April 5, 2012, ANR filed a Motion for Post-Judgment Sanctions asking that the
purgeable $250-per-day fine set forth in this Court’s February 16, 2012 Entry Order be imposed
as a non-purgeable sanction and continue to accrue until completion of the CAP. ANR is asking
for these sanctions because Respondents have not completed the CAP activities, which include
excavation and disposal of contaminated soil and installation of a granular iron permeable
reactive barrier.



1
    84 Woodstock, LLC was added as a Respondent as part of the Court’s February 16, 2012 Entry Order.
ANR v. Second City Prop., LLC, No. 100-7-11 Vtec (EO on Motion for Sanctions) (08-09-2012)   Page 2 of 4.


        During the April 25 and August 2, 2012 reconvened hearings, the Court received
testimony and evidence regarding the lack of progress by Respondents with regard to the CAP
activities. Mr. Matthew Becker, Environmental Analyst for ANR, testified that he is the ANR
staffer in charge of tracking CAP activities for this matter. Mr. Becker testified that as of 8:45
a.m., August 2, 2012, no on-site excavation or off-site barrier installation activities had been
undertaken. Mr. Becker testified that, although 84 Woodstock Avenue had recently been
cleared of vegetation and rubbish in preparation for excavation, no excavation work was
apparent. Mr. Becker also observed a single cut in the concrete slab at 84 Woodstock Avenue,
presumably also in preparation for excavation.
        The Court also received testimony on behalf of ANR from Mr. Ethan Abatiell, Vice
President of JAMAC. JAMAC owns the parcels identified as lots 5 and 6 which are adjacent to
the subject property and front on Harrington Avenue. The granular iron permeable reactive
barrier is to be installed on lots 5 and 6. Mr. Abatiell testified regarding JAMAC’s negotiation
with Mr. Ruggiero for the purchase of the two JAMAC parcels. Mr. Abatiell’s testimony was in
accord with Mr. Ruggiero’s testimony summarized below.
        In response to the testimony offered by ANR, Mr. Ruggiero testified that he has
renegotiated his contracts with an engineer and an excavation company to perform the CAP
activities. Furthermore, Mr. Ruggiero testified that he has made arrangements for the disposal
of the excavated contaminated material. Mr. Ruggiero testified that he has a verbal agreement
to purchase JAMAC lots 5 and 6, that he has prepared draft deeds for the purchase and shared
them with Mr. Abatiell, and that last week Mr. Abatiell provided revised deeds acceptable to
Mr. Ruggiero. Mr. Ruggiero explained that, without first purchasing the JAMAC lots, he does
not have any right to access the JAMAC lots to install the barrier required by the CAP.
       Mr. Ruggiero acknowledged that Respondents have not completed the CAP. Mr.
Ruggiero then testified that Respondents are without funds to carry out the CAP activities
beyond purchasing the JAMAC lots and that this is the reason for the ongoing delay in CAP
completion. He also stated that he had thought that a real property sale he undertook in April
would have provided the needed funds; however, he is now contemplating filing bankruptcy
because sufficient funds were not generated by that sale. Mr. Ruggiero stated that he needs
approximately $161,000 to complete the CAP.
        At the close of the August 2, 2012 hearing, the Court took a brief recess to allow the
parties to develop a revised approach for CAP completion. Based on the evidence presented
during the hearing, the Court also concluded that fines are appropriate in this matter, and we
discuss those now.
        Section 122 of Title 12 of the Vermont Statutes Annotated provides for the initiation of
contempt proceedings against any party who violates a court order, regardless of whether the
case is currently active. 12 V.S.A. § 122. This section does not limit the parties against whom
contempt proceedings may be initiated, nor does it limit the persons who may be punished for
their actions that are in contempt of a court order. See Vt. Women’s Health Ctr. v. Operation
Rescue, 159 Vt. 141, 145 (1992); Horton v. Chamberlain, 152 Vt. 351, 354 (1989).
        Compensatory fines and coercive sanctions may be imposed on a civil contemnor;
however, coercive sanctions must be purgeable, i.e., avoidable by adherence to the court’s
order. Mann v. Levin, 2004 VT 100, ¶ 32, 177 Vt. 261 (citing Vt. Women’s Health Ctr., 159 Vt. at
151); State v. Pownal Tanning Co., 142 Vt. 601, 603-604 (1983). Further, imprisonment can be
ANR v. Second City Prop., LLC, No. 100-7-11 Vtec (EO on Motion for Sanctions) (08-09-2012)   Page 3 of 4.


imposed as a means to compel the party to perform some act ordered by the court. See In re
Sage, 115 Vt. 516, 517 (1949); 12 V.S.A. § 123.
        This Court’s February 16, 2012 Entry Order imposed the following purgeable fine:

            a. Beginning on the date of this Order [February 16], and continuing until
               CAP completion, Respondents are hereby sanctioned a $250.00 per day
               fine. This accumulating fine is fully purgeable upon timely completion of
               the CAP . . . .

       This Court’s April 26, 2012 Entry Order continued this sanction unmodified. These prior
orders provided that should Respondents fail to complete the CAP upon the terms of the
schedule set forth in the Orders, then the fine will become due upon motion made by ANR, and
would be payable to the Vermont State Treasurer.
        With the current pending motion, ANR has again sought sanctions against Respondents,
arguing that Respondents have failed to complete the CAP within the schedule set by the
Court’s April 26, 2012 Order. ANR has calculated that Respondents are responsible for 100
days of continuing violations, and, therefore, ANR asks for a fine of $25,000. ANR asserts that
this level of fine is an appropriate response to Respondents’ failure to complete the CAP and
will encourage both these Respondents and the regulated community as a whole to comply
with court orders.
        In response to ANR’s request for sanctions, Mr. Ruggiero argues that full completion of
the CAP was not within his control until JAMAC was subpoenaed into Court for the April 26,
2012 hearing, as Respondents were without access to the JAMAC parcels. Mr. Ruggiero argues
that he believes a $1,000 fine is more appropriate in this matter.
         The Court determines that a FINE of $5,000 is warranted for Respondents’ failure to
timely complete the CAP, for Respondents’ disregard of this Court’s prior orders to either
complete the CAP or negotiate with ANR for additional time, and for deterrent value. The
Court concludes that there are mitigating circumstances which reduce the full fine of $25,000.
First, the CAP, in part, required work upon land to which Respondents had no access. Mr.
Ruggiero, on behalf of Respondents, has negotiated for the purchase of these necessary lots, has
agreed to purchase the lots and is granting ANR full access for CAP completion. Further
mitigating the level of fine is Respondents’ separate agreement to reimburse ANR for its costs in
completing the CAP and providing ANR with liens upon real property to secure this
reimbursement.
         Based upon the foregoing, we find and conclude that Respondents have failed to
complete the CAP as incorporated into the Court’s July 19, 2011 Stipulated Emergency Order
and as amended most recently by the Court’s April 26, 2012 Order. ANR’s Motion for Sanctions
is GRANTED, and we ORDER the following.2



        2
       This Order incorporates the parties’ agreement whereby Respondents will acquire the
JAMAC lots and ANR will undertake completion of the CAP, and, once the CAP is completed,
Respondents will reimburse ANR for the costs of the CAP.
ANR v. Second City Prop., LLC, No. 100-7-11 Vtec (EO on Motion for Sanctions) (08-09-2012)             Page 4 of 4.


1. Pursuant to the parties’ agreement and as ordered during the August 2, 2012 hearing, on or
   before August 9, 2012, Respondents shall purchase JAMAC lots 5 and 6 located off of
   Harrington Avenue. Respondents shall cause copies of deeds, with the town clerk’s
   notation of the date, book and page of recording, to be both filed with this Court and served
   on ANR. Copies of the recorded deeds shall be mailed to the Court and ANR on or before
   August 10, 2012.
2. During a recess of the August 2, 2012 hearing, the parties entered into an access agreement
   providing ANR with the right to enter and carry out all CAP activities on 84 Woodstock
   Avenue and JAMAC lots 5 and 6, located off of Harrington Avenue. The access agreement
   is hereby incorporated and made part of this Order. Thus, ANR now has the right to enter
   these properties, undertake the physical removal of source area contaminated soil, and
   install a granular iron permeable reactive barrier as identified in the CAP.
3. Any reasonable costs that ANR incurs in carrying out the CAP are fully reimburseable by
   Respondents. Furthermore, ANR is hereby entitled to a lien on the subject three properties
   for this reimbursement. John Ruggiero, as the sole member of 84 Woodstock, LLC; 5
   Harrington, LLC; and 6 Harrington, LLC, acknowledged his authority and provided assent
   to the lien securing the refundable CAP costs. ANR, in consultation with the Attorney
   General, will work with Mr. Ruggiero as to the form and documentation for these liens.
4. Respondents shall pay a FINE of $5,000 payable to the Treasurer, State of Vermont. This fine
   is due and payable within 30 days of this Order. Payment shall be by check made payable
   to the “Treasurer, State of Vermont” and forwarded to:

                  Sarah Hosford, Administrative Assistant
                  Compliance and Enforcement Division
                  Agency of Natural Resources
                  103 South Main Street/Old Cannery
                  Waterbury, VT 05671-4910

5. Upon completion of the CAP, ANR is directed to file a brief report with the Court so that
   this matter may be concluded.

        ANR’s petition also seeks incarceration. The Court will POSTPONE consideration of
such relief at this time; however, incarceration may be considered if Respondents fail to comply
with this Order. The hearing on the Order to Show Cause is CONTINUED. The Court will
hold a reconvened hearing on the Order to Show Cause upon motion by ANR.




_________________________________________                                        August 9, 2012
       Thomas G. Walsh, Judge                                                        Date
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Date copies sent to: ____________                                           Clerk's Initials _______
Copies sent to:
  John Zaikowski, Attorney for Petitioner Vermont Agency of Natural Resources
  Respondents Second City Properties, LLC; Second City, LLC; and 84 Woodstock, LLC
