# Hamilton Square, LLC v. United States

> United States Court of Federal Claims · July 15, 2025

URL: https://www.frixlaw.com/law-library/cases/11100154

## Case

- **Court:** United States Court of Federal Claims
- **Decided:** July 15, 2025
- **Precedential status:** Published
- **Opinion:** Opinion
- **Judges:** Thompson M. Dietz
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/11100154

## How later opinions describe it (automated extraction)

- affirming dismissal of a claim for breach of good faith and fair dealing where the express terms of the contract provide the plaintiff a mechanism for obtaining relief
- stating that “the opposing party must establish a genuine issue of material fact and cannot rest on mere allegations, but must present actual evidence”
- stating that “[i]nferring an implied duty . . . without a tether to the contract terms, would fundamentally alter the balance of risks and benefits associated with the [] agreement and cannot be the basis of a claim for breach of the implied duty 20 of good faith and fair deal…
- explaining that a condition does not create a right or duty but instead limits or modifies a contract provision
- stating that the “[t]erms of a . . . contract are presumed to be covenants, rather than conditions, unless it is clear that a condition precedent was intended”

## Opinion text

In the United States Court of Federal Claims
No. 20-1285
(Filed: July 15, 2025)

**************************************
HAMILTON SQUARE, LLC, *
*
Plaintiff, *
*
v. *
*
THE UNITED STATES, *
*
Defendant. *
**************************************

Joanne Leah Castella, Burke, Williams & Sorensen, LLP, Oakland, CA, counsel for Plaintiff.

Brittney M. Welch, U.S. Department of Justice, Civil Division, Washington, DC, counsel for
Defendant. With whom was Elizabeth R. McGurk-Fox, Office of General Counsel, Naval
Litigation Office, of counsel.

OPINION AND ORDER

DIETZ, Judge.

Hamilton Square, LLC (“Hamilton”) sued the United States for breach of contract and
breach of the implied duty of good faith and fair dealing in connection with Hamilton’s 2005
purchase from the United States Department of the Navy (“Navy”) of a plot of land formerly
used as a Naval Exchange gas and public works station. Hamilton alleges that the Navy breached
its contractual obligations by failing to remediate the land after Hamilton notified the Navy of
newly discovered contamination in 2019. Ruling on the government’s motion to dismiss the
complaint, the Court previously dismissed several of Hamilton’s claims but found that Hamilton
sufficiently stated claims for breach of contract based on the Navy’s alleged failure to remediate
newly discovered chloroform and petroleum contamination and for breach of the implied duty of
good faith and fair dealing.

Before the Court is the government’s motion for summary judgment on Hamilton’s
outstanding claims filed pursuant to Rule 56 of the Rules of the United States Court of Federal
Claims (“RCFC”). Hamilton opposes the motion. For the reasons set forth below, the Court
GRANTS-IN-PART and DENIES-IN-PART the government’s motion.
I. FACTUAL BACKGROUND 1

The dispute concerns 2.7 acres of land (the “Property”) in Novato, California, located
approximately 20 miles north of San Francisco. [ECF 66] at 8. 2 The Property was part of a 310-
acre Department of Defense facility. Id. From the mid-1970’s through the early 1990’s, the Navy
used the Property “as a Naval Exchange gas station and housed several underground gasoline
storage tanks.” Id. In 1998, after the facility was closed under the Defense Base Closure and
Realignment Act of 1993, the Navy and the Novato Public Finance Authority (“NPFA”) entered
into a purchase agreement to transfer the 310 acres, including the Property, to the NPFA. Id.

Due to leaks in the underground storage tanks, the Property had known petroleum
contamination in the soil and ground water. [ECF 66] at 8-9. Prior to the sale, the Navy
undertook efforts to remediate the Property for commercial use. Id. at 9. The remediation efforts,
which were overseen by the California Department of Toxic Substances Control (“DTSC”) and
the San Francisco Regional Water Quality Control Board (“RWQCB”), included the removal of
the storage tanks and surrounding impacted soils. Id. Residual petroleum contamination under
the gas station building was left in place. Id. The Navy also sampled the soil for contaminants,
such as gasoline constituents and chloroform. Id. The sampling data did not indicate any
chloroform contamination. Id.

In August 2003, the Navy released a Finding of Suitability to Transfer (the “FOST”).
[ECF 66-2] at 66. The Navy amended the FOST in September 2003. [ECF 66] at 10. The stated
purpose of the FOST was “to determine whether [the Property was] environmentally suitable for
transfer by deed under Section 120(h) of the Comprehensive Environmental Response,
Contamination, and Liability Act (CERCLA) in a manner protective of human health and the
environment.” [ECF 66-2] at 71. The FOST stated that the Property “will be sold for future
commercial use or as otherwise zoned by the City of Novato.” Id. It also identified “Lead” as the
only CERCLA hazardous substance stored, disposed of, or released at the Property between
1974 and 1992. Id. at 103. Additionally, it indicated that “[t]he only outstanding environmental
issues at the Property are petroleum contamination in groundwater and residual contamination in
soil” and that “[a]ll other environmental issues at the Property have been resolved.” Id. at 71.
The FOST concluded that the Property “is environmentally suitable for transfer by deed for
commercial use, subject to compliance with the covenants, conditions, and restrictions set forth
[therein].” Id. at 93.

Regarding the deed for transfer of the Property, the FOST required that it “include a
covenant by the United States, made pursuant to the provisions of CERCLA §
120(h)(3)(A)(ii)(II), warranting that any remedial or corrective action found to be necessary after
the date of the deed shall be conducted by the United States.” [ECF 66-2] at 90. CERCLA
applies to “any contract for the sale or other transfer of real property which is owned by the

1
The Court cites to the facts contained in the government’s motion for summary judgment, see Def.’s Mot. for
Summ. J. [ECF 66], to the extent that Hamilton does not dispute such facts—as demonstrated in their response to the
government’s motion, see Pl.’s Opp. to Def.’s Mot. for Summ. J. [ECF 67] at 8-13.
2
All page numbers referencing the parties’ briefs refer to the page numbers generated by the CM/ECF system.

2
United States and on which any hazardous substance was stored for one year or more, known to
have been released, or disposed of.” 42 U.S.C. § 9620(h)(1). Under CERCLA, any contract for
the sale of property must include a notice of “the type and quantity of such hazardous
substances” and “the time at which [] storage, release, or disposal took place.” Id. §
9620(h)(3)(i)(I-II). CERCLA contains a list of covered hazardous substances. See id. § 9601(14);
40 C.F.R. § 302.4(a). Petroleum is not included on the list. See id.

On October 23, 2003, the DTSC issued a letter titled “Concurrence with Final Finding of
Suitability to Transfer (FOST) . . . .” [ECF 66-2] at 104. In the letter, the DTSC and RWQCB
indicated that they reviewed the FOST and concurred with its findings. Id. Further, the DTSC
and RWQCB acknowledged that “[t]he FOST finds the property suitable for its intended use,
subject to compliance with [its] covenants, conditions, and restrictions.” Id. at 105.

Prior to finalizing its purchase of the Property from the Navy, “the NPFA demanded that
the Navy remove all petroleum-impacted soil.” [ECF 66] at 11. The Navy refused on the grounds
that it was not required to do so to make the Property suitable for commercial use. Id.
Consequently, the transfer of the Property to the NPFA was never finalized. [ECF 66-1] at 142.
Subsequently, the Navy sold the Property to Hamilton at a public auction in 2004. [ECF 66] at
11-12. Before the sale, the Navy, DTSC, and RWQCB executed a Covenant to Restrict Use of
Property (the “CRUP”). See [ECF 66-2] at 292-311. The CRUP stated that the Property was
“affected by petroleum contamination in soil and groundwater,” that “[p]etroleum hydrocarbon
contamination is present in the soil of all parcels of the Property,” and that “[p]etroleum
hydrocarbon and metals-impacted soil is present in the soil under a portion of [the gas station
building].” Id. at 294.

At auction, Hamilton submitted a $900,000 bid, which the Navy accepted. [ECF 66] at
12. Prior to finalizing the sale, Hamilton hired a private environmental consultant to conduct an
environmental due diligence evaluation. Id. at 13; First Am. Compl. [ECF 19] ¶ 31. The
evaluation noted that a risk assessment was conducted in 2001 and that the assessors found “that
the site was suitable for commercial/industrial use.” [ECF 66] at 13; [ECF 19] ¶ 31. The
evaluation also indicated that “a variance or termination of the Residential Use Restriction may
be possible to change the site use restrictions from commercial/industrial to residential.” [ECF
19] ¶ 32; see also [ECF 66] at 14.

Hamilton and the Navy finalized the sale of the Property and executed the transfer deed
(the “Deed”) on April 18, 2005. [ECF 66] at 14; [ECF 66-2] at 275. Under the Deed, Hamilton
“acknowledges that it has inspected, is aware of, and accepts the condition and state of repair of
the Property, and that the Property is conveyed ‘as is.’” [ECF 66-2] at 277. Although the Deed
contains a restriction prohibiting the use of the Property for residential purposes, it permits
Hamilton to request a variance or termination of the restriction from the Navy, subject to
approval by state and local government agencies. Id. at 278-79. Further, the Deed references the
FOST and states that the Property is subject to the CRUP. Id. at 275-77.

From 2005 to 2008, Hamilton sought to develop the Property for commercial purposes.
[ECF 66] at 17; [ECF 19] ¶ 42. However, these plans did not materialize. Id. Beginning in 2013,
Hamilton pursued development of the Property for residential purposes. [ECF 66] at 17; [ECF

3
19] at ¶¶ 43, 46. After several years of coordinating with the City of Novato and RWQCB,
Hamilton began the clean-up and remediation process for the subsurface soil and groundwater to
bring the Property up to residential standards. [ECF 19] ¶¶ 47, 51. As part of this effort,
Hamilton removed over 10,000 tons of impacted soil from the Property and replaced it with
clean fill. Id. ¶ 52. Hamilton also conducted additional soil vapor sampling to analyze and
improve the Property’s suitability for residential use. Id. ¶¶ 51-60.

In January 2019, Hamilton’s environmental consultant conducted additional soil gas
sampling at various locations and depths on the Property and analyzed the samples for various
gasoline constituents, including chloroform. [ECF 66] at 19. Based on the soil analysis results it
received from Hamilton, the RWQCB responded as follows:

Current soil vapor results indicate there may be additional secondary
source contamination. Based on the soil vapor data, the site is not
suitable for unrestricted land use, but it may be suitable for
residential with effective indoor air mitigation measures. Additional
soil vapor monitoring may be necessary for the following reasons:
(1) determine if additional work is necessary to clean up the site to
residential standards; (2) human health risk assessment; and (3)
determine if the Land Use Control can be removed or modified to
allow unrestricted or residential development with indoor air
mitigation measures.

[ECF 66-2] at 789. In June 2019, Hamilton’s consultant prepared a “Soil Vapor Investigation
Report and Work Plan.” Id. at 799. The report indicated that “[c]hloroform was detected in two
samples.” Id. at 809.

On June 13, 2019, Hamilton sent an email to the RWQCB and attached the Soil Vapor
Investigation Report and Work Plan. [ECF 66-2] at 797. Hamilton copied two Navy officials—
one of whom was employed at the West Coast Base Realignment and Closure Program
Management Office. Id.; Pl.’s Resp. [ECF 67] at 17. The email stated the following:

Please find attached a copy of the Soil Vapor Investigation Report
and Work Plan prepared by [our consultant] dated 6/12/19. As the
plan indicates, we have proposed to install 7 additional soil vapor
wells in response to agency comments, and plan to conduct a second
round of sampling to account for seasonal variability. We plan to
install the wells the second week in July and then will conduct
sampling shortly thereafter.

Now that the [RWQCB] has taken over as the lead agency we are
hopeful that the process going forward will be more streamlined.
Given this change, after you have had an opportunity to review the
attached work plan, and in advance of the second round of testing,
we would like to have a phone call or meeting with the [RWQCB]
to discuss technical & logistical issues.

4
[ECF 66-2] at 797. The record does not include any further communications stemming from this
email.

In a separate communication from Hamilton to the Navy dated October 8, 2019,
Hamilton stated:

Thanks again for taking the time today to review the Navy’s process
with respect to lifting/modifying CRUPs. I found it helpful and I'm
certain the folks at the RWQCB did as well.

As we touched upon at the end of our call, the current owners
purchased the site from the Navy with the understanding that it had
been cleaned to a level appropriate for Commercial Development.
The only prohibited uses were called out in the CRUP – Residential
and Day Care Facilities. The site was cleared for commercial
development and we entitled a 20,000 sf office project at the site
with this understanding.

Now, over a decade later, after spending well over a million dollars
on soil remediation, the [RWQCB] is telling us that the Soil Vapor
levels at the site are not currently, and never have been, appropriate
for a commercial use. Gratefully, there is a path forward by means
of a Soil Vapor Extraction System and a Vapor Mitigation System.
These are very expensive undertakings, however, and we think it’s
clear that the Navy bears some responsibility for cleaning up the soil
vapor plume at this site.

Can you please help direct me to the appropriate person at the Navy
to whom I should take this issue for further discussion?

[ECF 66-2] at 975. The Navy responded on October 9, 2019, directing Hamilton to “the base
closure manager for [the Department of Defense Housing Facility] Novato.” Id. at 976. The
response email further stated:

[The base closure manager] would be the responsible person in our
office to handle your concerns and walk through the process when
we believe a claim is warranted. [He] is copied . . . .

We were equally surprised by [RWQCB’s] position that commercial
should have never been authorized. My personal opinion is that
[RWQCB] may not have all the historical details and our logic and
conclusions at the time were perhaps not so faulty. As science and
regulatory perspective changes over time, we can’t hold a lens to our
program decisions so strictly, particularly when both regulatory
agencies approved the 2001 final revised risk assessment.

5
Our team owes you several different items as a result from the call.
I’ll try to send over some example[s] of Notices of Release/Deed
Amendments. Again, I don’t think we’re in the scenario of a full
restriction release, so the [Notice of Release] is probably not the
appropriate form. Once we determine who is our supporting counsel
in this office, I’ll provide some additional insight based on their
advice.

Id. The record does not include any further communications in connection with this email
exchange.

On March 6, 2020, Hamilton emailed the Navy stating that its attorney would be
contacting the Navy to request a meeting. [ECF 66-2] at 983. Thereafter, on April 1, 2020,
Hamilton’s attorney sent a letter to the Navy. Id. at 984. In the letter, Hamilton explained that
“the [RWQCB] ha[d] determined as of October 2019 that the [Property] never ha[d] been
suitable to use for commercial building purposes.” Id. Hamilton further explained that it “ha[d]
expended a considerable amount of effort and money to bring th[e] site to residential
development standards and th[e] site is still not suitable even for commercial development,
despite representations by the Navy to the contrary.” Id. According to Hamilton, the Deed
“contains the necessary warranty regarding cleanup and [a]dditional [r]emediation
[o]bligation[s].” Id. Hamilton sought to discuss with the Navy “the status of the site and the need
for additional site remediation since [Hamilton] acquired the site in 2005.” Id. Hamilton filed its
original complaint in this Court on September 29, 2020. Compl. [ECF 1]. Hamilton amended its
complaint on April 5, 2021. [ECF 19].

II. PROCEDURAL HISTORY

In its amended complaint, Hamilton alleges that the Navy breached its obligations under
the Deed by failing to adequately perform ongoing corrective action as required by the Deed;
failing to ensure that the Property was suitable for commercial development; and failing to
remediate the Property, either through performance or payment of costs, after Hamilton provided
the Navy with notice that hazardous substances, including petroleum, existed on the Property
prior to the date of the Deed. [ECF 19] ¶ 69(a)-(c). Hamilton also alleges that the Navy breached
the implied duty of good faith and fair dealing “by failing to diligently perform[] all ongoing
obligations required by the Deed, including performing ongoing corrective actions.” Id. ¶ 75.

On May 7, 2021, the government moved to dismiss Hamilton’s complaint for lack of
subject matter jurisdiction and for failure to state a claim pursuant to RCFC 12(b)(1) and RCFC
12(b)(6). Def.’s Mot. to Dismiss [ECF 22]. On July 20, 2022, the Court granted-in-part and
denied-in-part the government’s motion. Hamilton Square, LLC v. United States, 160 Fed. Cl.
617 (2022). The Court found that “Hamilton [] sufficiently stated a breach of contract claim
based on the Navy’s alleged failure to remediate the Property after Hamilton provided
notification of newly discovered chloroform and petroleum contamination” and that “Hamilton []
sufficiently stated a claim for breach of the implied duty of good faith and fair dealing.” Id. at
624. The Court dismissed Hamilton’s other breach of contract claims. Id.

6
On August 16, 2022, the government filed a motion for reconsideration pursuant to
RCFC 54 and 59(a)(1)(A)-(B), requesting that the Court reconsider its finding that Hamilton
“sufficiently stated a timely claim for breach of contract based on the Navy’s alleged failure to
remediate newly discovered contaminants on the [P]roperty.” Def.’s Mot. for Recons. [ECF 37]
at 5. The government also requested that the Court reconsider its finding that Hamilton
“sufficiently stated a claim for breach of the implied duty of good faith and fair dealing based on
the Navy’s alleged failure to perform ongoing corrective actions to protect human health and the
environment and to ensure the [P]roperty was suitable for commercial development.” Id. The
Court denied the government’s motion on December 1, 2022. Hamilton Square, LLC v. United
States, No. 20-1285, 2022 WL 17351507, at *1 (Fed. Cl. Dec. 1, 2022). The Court concluded
that reconsideration was not warranted, and that further discovery and factual development was
necessary to resolve Hamilton’s remaining claims. Id. at *3.

Thereafter, in accordance with the Court’s scheduling order, [ECF 45], the government
filed an answer to Hamilton’s amended complaint on January 13, 2023, [ECF 46]. The parties
then conducted discovery. During discovery, the parties agreed to bifurcate the case into two
phases—one for liability and, if necessary, one for damages. [ECF 60] at 2. Fact discovery on
liability closed on July 16, 2024. Id. Next, the parties proposed a schedule for filing cross-
motions for summary judgment. [ECF 64]. Pursuant to that schedule, which the Court adopted,
Order [ECF 65], the government filed a motion for summary judgment on November 8, 2024,
[ECF 66]. Hamilton opposed the government’s motion on December 9, 2024, [ECF 67], and the
government replied thereto on December 23, 2024, Def.’s Reply [ECF 73]. Hamilton did not
cross-move for summary judgment. The Court held oral argument on the government’s motion
for summary judgment on June 25, 2025. Order [ECF 86].

III. STANDARDS OF REVIEW

Summary judgment may be granted if “there is no genuine dispute as to any material fact
and the movant is entitled to judgment as a matter of law.” RCFC 56(a); see Agility Def. & Gov’t
Servs., Inc. v. United States, 115 Fed. Cl. 247, 250 (2014). “An issue is genuine if it ‘may
reasonably be resolved in favor of either party.’” Vanquish Worldwide, LLC v. United States, 147
Fed. Cl. 390, 405 (2020) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986)).
“A fact is material if it will make a difference in the result of a case under the governing law.”
Beres v. United States, 143 Fed. Cl. 27, 61 (2019) (citing Anderson, 477 U.S. at 248).

“[A]t the summary judgment stage[,] the judge’s function is not [] to weigh the evidence
and determine the truth of the matter, but to determine whether there is a genuine issue for trial.”
Anderson, 477 U.S. at 249. “The judge must determine whether the evidence presents a
disagreement sufficient to require submission to fact finding, or whether the issues presented are
so one-sided that one party must prevail as a matter of law.” Beres, 143 Fed. Cl. at 62 (citing
Anderson, 477 U.S. at 250-52; Jay v. Sec’y of Dep’t of Health & Hum. Servs., 998 F.2d 979, 982
(Fed. Cir. 1993); Leggitte v. United States, 104 Fed. Cl. 315, 316 (2012)). The moving party
bears the initial burden of demonstrating the absence of any genuine issue of material fact.
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). “[The moving party’s] motion for summary
judgment may succeed whether or not accompanied by affidavits and/or other documentary
evidence in addition to the pleadings already on file.” Rice Sys., Inc. v. United States, 62 Fed. Cl.

7
608, 618 (2004) (citing Celotex, 477 U.S. at 324). “If the moving party makes such a showing,
the burden shifts to the nonmoving party to demonstrate that a genuine dispute regarding a
material fact exists.” Id. (citing Celotex, 477 U.S. at 322). “[T]o prevail . . . the nonmoving party
must go beyond the pleadings by use of evidence such as affidavits, depositions, answers to
interrogatories, and admissions.” Id. (citing Celotex, 477 U.S. at 324); see also Long Island Sav.
Bank, FSB v. United States, 503 F.3d 1234, 1244 (Fed. Cir. 2007) (stating that “the opposing
party must establish a genuine issue of material fact and cannot rest on mere allegations, but
must present actual evidence”).

The court must draw all inferences from the underlying facts in the light most favorable
to the nonmoving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
587 (1986) (citing United States v. Diebold, Inc., 369 U.S. 654, 655 (1962)). “[I]f the pleadings,
depositions, answers to interrogatories, and admissions on file, together with the affidavits . . .
show that there is no genuine issue as to any material fact,” the court shall grant summary
judgment to the moving party. Holland v. United States, 57 Fed. Cl. 540, 560 (2003) (quoting
RCFC 56(c)). Further, “[i]f the evidence is merely colorable, or is not significantly probative,
summary judgment may be granted.” Anderson, 477 U.S. at 249-50 (internal citations omitted).
However, if “there is sufficient evidence favoring the nonmoving party for a [trier of fact] to
return a verdict for that party,” summary judgment is not appropriate. Anderson, 477 U.S. at 249.

IV. ANALYSIS

In its motion, the government argues that it is entitled to summary judgment on
Hamilton’s claims of breach of contract and breach of the implied duty of good faith and fair
dealing. First, the government argues that Hamilton failed to provide notice of the alleged newly
discovered contaminants as required by the Deed and that therefore the government cannot be
found to have breached a duty to remediate. [ECF 66] at 25-30. Next, the government contends
that, even if the Court finds that Hamilton complied with the Deed’s notice requirements, the
Navy did not have any further remediation obligations with respect to the petroleum or
chloroform. Id. at 30-37. Lastly, the government asserts that Hamilton’s breach of the implied
duty of good faith and fair dealing claim “is factually and legally unsupportable.” Id. at 37-41.
As explained below, the Court finds that (i) the notice obligations under the Deed are not
conditions precedent to the Navy’s remediation obligations, (ii) there are genuine issues of
material fact regarding the chloroform contamination on the Property that preclude the granting
of summary judgment, (iii) the government is entitled to summary judgment on Hamilton’s
breach of contract claim regarding the petroleum contamination on the Property, and (iv) the
government is entitled to summary judgment on Hamilton’s breach of the implied duty of good
faith and fair dealing claim.

A. Hamilton’s Notice Obligation

The government argues that Hamilton “failed to provide notification of its alleged
discoveries as required by the Deed, and as such, fails to state a valid breach of contract claim.”
[ECF 66] at 25. According to the government, since “[t]he Navy was not on notice about the
emergence of any previously unidentified contaminant, [] it cannot have breached a duty to
remediate, and summary judgment should be granted in the Government’s favor.” Id. Hamilton

8
counters that it “complied with the notice requirements of the Deed, notwithstanding that notice
was not mailed to [the Navy,]” and that the Navy “received actual notice of previously
unidentified contamination.” [ECF 67] at 14. According to Hamilton, the plain text of the Deed
“indicate[s] that notice of previously unidentified contamination is not required . . . to trigger the
Navy’s response action obligations” and that “[t]he Deed either explicitly does not require notice
. . . , or the text is too ambiguous for the Court to impose a new draconian condition precedent
absent from the Deed.” Id. at 16. Hamilton adds that, “[i]n either case, summary judgment for the
Navy based on its contrary interpretation should be denied.” Id. The Court finds that the
government is not entitled to summary judgment on Hamilton’s breach of contract claims on the
basis that Hamilton failed to comply with the Deed’s notification requirements because the
notification requirements are not conditions precedent to the Navy’s remediation obligations.

“Contract interpretation begins with the language of the written agreement.” Coast Fed.
Bank, FSB v. United States, 323 F.3d 1035, 1038 (Fed. Cir. 2003) (citing Foley Co. v. United
States, 11 F.3d 1032, 1034 (Fed. Cir. 1993)). The terms of the contract are given “their ordinary
meaning unless the parties mutually intended and agreed to an alternative meaning.” Harris v.
Dep’t of Veteran Affs., 142 F.3d 1463, 1467 (Fed. Cir. 1998). A contract should “be considered as
a whole and interpreted so as to harmonize and give reasonable meaning to all of its parts.” NVT
Techs., Inc. v. United States, 370 F.3d 1153, 1159 (Fed. Cir. 2004) (citing McAbee Constr., Inc. v.
United States, 97 F.3d 1431, 1434-35 (Fed. Cir. 1996)). This is because contract provisions
“must be so construed as to effectuate [the contract’s] spirit and purpose.” Gould, Inc. v. United
States, 935 F.2d 1271, 1274 (Fed. Cir. 1991) (quoting Arizona v. United States, 216 Ct. Cl. 221,
236 (1978)). “[A]n interpretation which gives a reasonable meaning to all of [the contract’s]
parts will be preferred to one which leaves a portion of it useless, inexplicable, inoperative, void,
insignificant, meaningless, superfluous, or achieves a weird and whimsical result.” Id.

A breach of contract is a “[f]ailure to perform a contractual duty when it is due.” Winstar
Corp. v. United States, 64 F.3d 1531, 1545 (Fed. Cir. 1995), aff’d and remanded, 518 U.S. 839
(1996) (citing Restatement (Second) of Contracts § 235(2) (Am. L. Inst. 1981) (“Restatement
(Second) Contracts”)). “Performance of a duty subject to a condition cannot become due unless
the condition occurs or its non-occurrence is excused.” Sys. Fuels, Inc. v. United States, 65 Fed.
Cl. 163, 173 (2005) (quoting Restatement (Second) Contracts § 225) (internal quotation marks
omitted). “A condition ‘is an event, not certain to occur, which must occur . . . before
performance under a contract becomes due.” Sys. Fuels, Inc., 65 Fed. Cl. at 173 (quoting
Restatement (Second) of Contracts § 224). “A contractual condition is to be distinguished from a
promise, obligation, or covenant in that a condition creates no right or duty in and of itself, but
merely acts as a limiting or modifying contract provision.” Favell v. United States, 16 Cl. Ct.
700, 721 (1989). “If a condition does not occur, whether through breach or other cause, the party
fails to meet the condition, and acquires no right to enforce the promise.” Id. “A contractual
promise or obligation, on the other hand, raises a duty to perform a service and its breach
subjects the promisor to liability and damages, but does not necessarily excuse performance by
the other contracting party.” Id. (citing United States v. Schaeffer, 319 F.2d 907 (9th Cir.1963),
cert. denied, 376 U.S. 943 (1964)). “Conditions precedent are disfavored and will not be read
into a contract unless required by plain, unambiguous language.” RT Computer Graphics, Inc. v.
United States, 44 Fed. Cl. 747, 756 (1999) (quoting Effects Assocs., Inc. v. Cohen, 908 F.2d 555,
559 n.7 (9th Cir. 1990)) (internal quotation marks omitted); see also Bitmanagement Software

9
GmbH v. United States, 989 F.3d 938, 950 (Fed. Cir. 2021) (stating that the “[t]erms of a . . .
contract are presumed to be covenants, rather than conditions, unless it is clear that a condition
precedent was intended”).

In the instant case, Section II.K of the Deed contains several “notices, assurances,
covenants and declarations [that] apply to the Property.” [ECF 66-2] at 281. Hamilton relies on
Section II.K(3) to support its claim that the Navy has a duty to conduct remedial action on the
newly discovered chloroform and petroleum. [ECF 67] at 24. In its motion, the government
contends that Hamilton had to comply with the notification requirements under Sections II.K(5)
and IV before it could bring a breach of contract claim based on the Navy’s alleged failure to
perform additional remediation. [ECF 66] at 31. Despite the government’s contentions, however,
neither the notification requirements in Section II.K(5) nor those in Section IV are conditions
precedent to the Navy’s remediation obligations. Section II.K(3) states:

(3) Additional Remediation Obligation. GRANTOR covenants for
the benefit of GRANTEE, its successors and assigns, as a covenant
running with the land, that GRANTOR shall conduct any additional
remedial action found to be necessary after the date of this Deed for
any hazardous substance existing on the Property prior to the date
of this Deed. This covenant shall not apply to the extent that the
GRANTEE caused or contributed to any release or threatened
release of any hazardous substance, pollutant, or contaminant.

[ECF 66-2] at 281. Based on its plain text, Section II.K(3) does not contain a condition precedent
that requires Hamilton to notify the Navy of the need for additional remedial action. See Sys.
Fuel, Inc., 65 Fed. Cl. at 173 (finding that the payment of a fee was a condition precedent to a
delivery obligation under the contract because the unambiguous text of the contract
“contractually linked” the payment and delivery terms). Instead, Section II.K(3) is a stand-alone
covenant that obligates the Navy to conduct additional remediation under certain circumstances.

Like Section II.K(3), Section II.K(5) also contains a stand-alone covenant, albeit one that
obligates Hamilton to do certain things. It states:

(5) Notification. GRANTEE agrees, on behalf of itself and its
successors and assigns, as a covenant running with the land, that it
shall:

(a) Notify GRANTOR in writing within 90 days after
learning of any previously unidentified condition of the Property
that suggests a response action is necessary, or, within 15 days after
receiving notice of a claim by Federal, State or local regulators, or
other third parties, of the existence of any condition on the Property
that suggests a response action is necessary. If GRANTEE, or its
successors and assigns, is served with a complaint or written notice
of a claim by Federal, State or local regulators, the served party shall

10
provide GRANTOR with a copy of such document not later than 15
days following service of such document; and

(b) Furnish GRANTOR copies of pertinent papers received
by GRANTEE or any successors and assigns; and

(c) Provide, upon written notification and request of
GRANTOR, reasonable access to the records and personnel of
GRANTEE, or any successors and assigns, for purposes of
defending or resolving the need for additional response action.

[ECF 66-2] at 282. Thus, under Section II.K(5), Hamilton must notify the Navy of a previously
unidentified condition on the Property or of a claim by government regulators due to a condition
on the Property. Further, Hamilton must provide the Navy with relevant records and access to the
Property. Notably, this Section does not describe a condition that must occur for Hamilton to
enforce the Navy’s covenant to perform additional remediation. Rather, it imposes separate
obligations on Hamilton and provides the Navy with a right to enforce such obligations against
Hamilton. In other words, Section II.K(5) does not limit or modify the Navy’s remediation
obligations under Section II.K(3). See Favell, 16 Cl. Ct. at 721 (explaining that a condition does
not create a right or duty but instead limits or modifies a contract provision). Instead, Section
II.K(5) creates standalone rights and duties. See Stone Forest Indus., Inc. v. United States, 26 Cl.
Ct. 410, 417 (1992) (finding that a “time limitation is not a covenant . . . because it does not
create a right or duty in and of itself” and because it “merely limits the contractor’s right to
recover the refunds”). Therefore, for the Court to require Hamilton to first comply with its
obligations under Section II.K(5) prior to enforcing the Navy’s remediation obligations under
Section II.K(3), the Court would have to interpret Hamilton’s obligations under Section II.K(5)
as conditions precedent to the Navy’s remediation obligations under Section II.K(3). The
language of the Deed does not support such an interpretation. While “[n]o particular form of
language is necessary to make an event a condition,” Restatement (Second) of Contracts § 226,
the Court will not create a condition precedent where it is not supported by the plain language of
the Deed, see RT Computer Graphics, Inc., 44 Fed. Cl. at 756 (finding no condition precedent
where the contract did not contain “a clear signal” that the term constituted a condition
precedent).

The government also argues that Hamilton failed to comply with the notification
requirements in Section IV by not providing written notice of the newly discovered contaminants
to the specific addresses listed in the Deed. [ECF 66] at 26. However, like the plain language of
the notification requirements in Section II.K(5), the plain language of the requirements of
Section IV cannot be read to create a condition precedent to the Navy’s remediation obligations.
Moreover, based on its plain language, Section IV does not restrict the validity of notices under
the Deed to only those notices that are in writing and delivered to physical addresses. Rather, it
contains an overarching provision that defines what constitutes sufficient notice under the Deed.
In relevant part, Section IV states: “Notices shall be deemed sufficient under this Deed if made in
writing and submitted to the following addresses (or to any new or substitute address hereinafter
specified, in a writing theretofore delivered in accordance with the notice procedures set forth
herein by the intended recipient of such notice).” [ECF 66-2] at 283. It then lists the physical

11
addresses for each recipient. Id. Thus, while Section IV describes what type of notice is sufficient
under the Deed, it does not state that such notice is a condition precedent to the enforcement of
other obligations set forth in the Deed. See RT Computer Graphics, Inc., 44 Fed. Cl. at 756. It
also does not state that the type of notice described therein is the only form of acceptable notice.
Instead, it provides that a written notice delivered in the manner prescribed in Section IV will be
sufficient under any circumstance. See 15 Williston on Contracts § 48:7 (4th ed. 2025) (stating
that “the parties may contract respecting how and to whom notice shall be given, and when they
do so, the giving of notice by the method specified in the contract is sufficient whether it results
in actual notice or not”). 3

B. The Navy’s Obligation to Remediate Chloroform

Regarding the chloroform contamination, the government posits that “Hamilton must
demonstrate under Section K of the Deed that it meets the threshold for remediation
responsibility” and that this threshold “is to demonstrate that [the chloroform] was present on the
[] Property prior to transfer and as a result of the Navy’s activities.” [ECF 66] at 30. The
government asserts that “[n]ot only has Hamilton failed to meet this threshold – the facts
themselves do not support Hamilton’s arguments.” Id. According to the government, “after over
a year of discovery, Hamilton has failed to establish that chloroform was even present on the []
Property prior to transfer.” Id. at 31. Hamilton responds that “[t]he Navy does not dispute that
Hamilton detected chloroform on the Property in 2019” and that “[t]he Navy instead relies on
conclusory statements to argue that the chloroform was not present prior to the recording of the
Deed.” [ECF 67] at 24. Hamilton contends that “[t]he detection of chloroform in 2019 raises a
genuine issue of material fact about whether chloroform existed on the Property prior to
transfer,” thereby triggering the government’s remediation obligation under Section II.K(3) of
the deed. Id. at 25. The Court finds that there is a genuine issue of material fact as to whether the
Navy breached its obligation under the Deed to perform remedial action with respect to the
newly discovered chloroform and that the government is not entitled to summary judgment on
this claim.

CERCLA applies to “any contract for the sale or other transfer of real property which is
owned by the United States and on which any hazardous substance was stored for one year or
more, known to have been released, or disposed of.” 42 U.S.C. § 9620(h)(1). Under CERCLA,
any contract for the sale of property must include a notice of “the type and quantity of such
hazardous substances” and “the time at which such storage, release, or disposal took place.” Id. §
9620(h)(3)(A)(i)(I-II). CERCLA lists the covered hazardous substances. See id. § 9601(14); 40
C.F.R. § 302.4(a). Where property is transferred by the government to another party, CERCLA
also mandates that any contract for the sale of property include a covenant warranting that “any
remedial action found to be necessary after the date of [the] transfer shall be conducted by the
United States.” 42 U.S.C. § 9620(h)(3)(ii)(II). In the instant case, Exhibit D to the Deed

3
Because the Court finds that the notification provisions in Sections II.K(5) and IV are not conditions precedent to
the Navy’s remediation obligations under the Deed, the Court need not address whether Hamilton complied with its
obligations to provide notice. If the Court were to find that Hamilton failed to comply with its notification
obligations under the Deed, such failure may constitute a breach of contract that subjects Hamilton to liability and
damages; however, such a breach would not necessarily excuse the Navy from performing its remediation
obligations under the Deed. See Favell, 16 Cl. Ct. at 721.

12
identified “Lead” as the only hazardous substance known to have been stored, released, or
disposed of on the Property. [ECF 66-2] at 290. Additionally, Section II.K(3) of the Deed
provided that the Navy “covenants, for the benefit of [Hamilton] . . . that [the Navy] shall
conduct any additional remedial action found to be necessary after the date of th[e] Deed for any
hazardous substance existing on the Property prior to the date of th[e] Deed.” Id. at 281.

Chloroform is a hazardous substance under CERCLA. 40 C.F.R. § 302.4(a). 4 It is also
undisputed that, in January 2019, Hamilton’s environmental consultant discovered chloroform on
the Property after the parties executed the Deed. [ECF 66] at 19 (the government acknowledging
Hamilton’s discovery of chloroform). Thus, the issue before the Court is whether the newly
discovered chloroform existed on the Property prior to the date of the Deed and, if so, whether
additional remedial action under Section II.K(3) is necessary. At this stage, the Court “must
determine whether the evidence presents a disagreement sufficient to require submission to fact
finding, or whether the issues presented are so one-sided that one party must prevail as a matter
of law.” Beres, 143 Fed. Cl. at 62 (citing Anderson, 477 U.S. at 250-52; Jay, 998 F.2d at 982).

To satisfy its burden, the government relies on sampling conducted prior to transfer to
show that “there was no known release or disposal of chloroform on the [] Property.” [ECF 66] at
32. Additionally, the government relies on the declaration of a Navy official, who states that he
“reviewed reports and sampling data related to the Navy’s cleanup of the [] Property prior to
transfer.” [ECF 66-1] at 144. He explains: “As part of the Navy’s cleanup, sampling for gasoline
constituents, volatile organic compounds (including chloroform) . . . in soil, groundwater, and
soil gas . . . were collected and analyzed, using analytical methods approved by the [DTSC] and
the [RWQCB]” and that “[t]he sampling data confirmed that there was no known release or
disposal of [c]hloroform at the [] Property, and therefore no need to further investigate
chloroform.” Id. The official further explains that “the Navy issued a [FOST] for the [] Property”
and an amended FOST, and that the FOST “did not identify chloroform as a hazardous
substance, since there had been no storage, release, or disposal of that chemical on the []
Property.” Id. In addition to referencing the Navy’s sampling data, the official references
sampling conducted by Hamilton’s environmental consultant in May 2005 and notes that “[n]one
of the sampling results (including soil vapor) indicated the presence of chloroform at the []
Property.” Id. at 145. Based on this declaration and the referenced sampling data and reports, the
Court finds that the government has shown the absence of a genuine issue on whether
chloroform existed on the Property at the time of transfer. Therefore, the burden shifts to
Hamilton to show a genuine issue of material fact. See Rice Sys., Inc., 62 Fed. Cl. at 618 (citing
Celotex, 477 U.S. at 322).

Hamilton asserts that “[t]he detection of chloroform in 2019 raises a genuine issue of
material fact about whether chloroform existed on the Property prior to transfer.” [ECF 67] at 25.
It argues that the Navy’s testing prior to transfer “could not ‘confirm’ that there was no
chloroform existing on the Property—it could confirm only that chloroform was not detected by

4
Chloroform “is a colorless liquid with a pleasant, nonirritating odor and a slightly sweet taste.” National Institute
of Health, National Library of Medicine, National Center for Biotechnology Information, Compound Summary,
Chloroform, https://pubchem.ncbi.nlm.nih.gov/compound/Chloroform (last visited July 9, 2025). Chloroform “can
[] be formed in small amounts when chlorine is added to water.” Id. It is “[u]sed as a solvent, to make other
chemicals, as a fumigant,” and “for extraction and spot cleaning.” Id.

13
that study in selected areas of the Property at that specific time.” Id. In response to a government
interrogatory, Hamilton stated: “Since the date of transfer, Hamilton has taken no action that
would result in the introduction of chloroform to the [] Property.” [ECF 66-1] at 117. Hamilton
further stated that executive officers for Hamilton and related businesses “ha[ve] knowledge as to
the fact that Hamilton took no actions that would result in the introduction of chloroform to the []
Property.” Id. According to Hamilton, the Navy ignores the fact “that Hamilton has owned the
land only in an undeveloped condition since 2005, but the Navy operated an industrial gas
station, tank farm, and public works support facility on the Property for twenty years.” [ECF 67]
at 25. The Court finds that Hamilton has met its burden to demonstrate the existence of a genuine
issue of material fact—namely, whether the newly discovered chloroform existed on the property
prior to the date of the Deed. Based on the facts of this case and Hamilton’s interrogatory
response, a rational trier of fact could resolve this issue in Hamilton’s favor. 5

In its motion, the government does not address the secondary determination of whether
additional remedial action is necessary under Section II.K(3) because of chloroform
contamination. See generally [ECF 66]. If chloroform contamination is found to have existed on
the Property prior to the date of the Deed, Section II.K(3) requires that the Navy perform
“additional remedial action . . . found to be necessary.” [ECF 66-2] at 281. Thus, in addition to
the origin of the chloroform contamination, the Court views the extent of the chloroform
contamination on the Property and whether such contamination requires remedial action under
the Deed as unresolved issues that cannot be resolved on the instant summary judgment motion.

C. The Navy’s Obligation to Remediate Petroleum

The government argues that, to prevail on its breach of contract claim regarding
petroleum contamination, “Hamilton must demonstrate under Section II.L of the Deed that, as a
threshold matter, it [] learned of a previously unidentified release or threatened release of
petroleum,” [ECF 66] at 32, and that “Hamilton [] never discovered a previously unidentified
release of petroleum,” id. at 33. As it argued with respect to Hamilton’s chloroform
contamination claim, the government asserts that “after over a year of discovery, Hamilton
fail[ed] to provide any documentation of a previously unidentified [petroleum] release.” Id. at 34.
The government further states that Section II.L of the Deed “requires only notification . . . , not

5
In its opposition, Hamilton states that “[e]xpert evaluation on the Navy’s testing, historical chloroform uses, and
Hamilton’s activities since transfer is required before anyone can ‘confirm’ that the chloroform detected in 2019 did
not predate transfer.” [ECF 67] at 25. The record is unclear on the deadline for expert discovery. Based on the
parties’ Joint Preliminary Status Report, the Court issued a scheduling order providing that “[d]iscovery shall close
on September 25, 2023. [ECF 50] (emphasis omitted). Thereafter, the deadline was extended multiple times, see
[ECF 52, 55, 58, 60, 62], with discovery ultimately closing on August 9, 2024, [ECF 62]. During discovery, the
parties agreed to bifurcate the case into separate phases for liability and damages, [ECF 60] at 2, but disagreed on
whether expert discovery on damages was necessary, see Joint Status Report [ECF 59] at 4. At that point, Hamilton
argued that “the time for expert discovery ha[d] not expired,” id. at 5, and that “[e]xpert analysis [wa]s necessary” to
determine the portion of its costs incurred to remediate the Property to commercial standards, id. at 4. The
government countered that “[t]he Court’s scheduling orders have set one time period for all discovery,” id. at 6, and
that Hamilton failed to timely raise “[e]xpert testimony about damages,” id. The Court will address the lack of
clarity regarding the status of discovery when it sets a schedule for further proceedings. At a minimum, however, it
appears that the parties anticipated expert discovery at the damages phase. It may be the case that issues raised
during such expert discovery—issues relating to the origin and extent of chloroform contamination—implicate
liability as well.

14
remediation.” Id. Because “CERCLA excludes petroleum or its derivatives from the definition of
hazardous substances,” id. at 35, the government contends that the Navy’s remediation
obligations under Section II.K of the Deed are not triggered, id. at 37.

According to Hamilton, the government’s contention that it failed to identify any
previously unidentified petroleum at the Property “is wrong [because] the petroleum
contamination discovered at the Property by Hamilton far exceeds the scope of the
contamination disclosed by the Navy’s FOST.” [ECF 67] at 26. Rather, Hamilton argues that
“[t]he actual petroleum contamination was larger than disclosed, was located in more areas than
disclosed, and was more severe than disclosed.” Id. Because “[t]his larger, more expansive, and
more severe contamination was not previously identified at the time of the transfer . . . [Hamilton
claims that] the Navy is obligated by the Deed to remediate it.” Id. Hamilton argues that since
“[t]he Navy denies these facts, [] a genuine issue of material fact remains in dispute and
summary judgment should be denied.” Id. Additionally, regarding the Navy’s obligation to
conduct remediation of petroleum under the Deed, Hamilton asserts that the reference to Section
II.K(5) in Section II.L demonstrates that notification of a previously unidentified release of
petroleum under Section II.L requires that “the Navy [] assess whether a ‘response action’ is
required.” Id. at 30. Although Hamilton concedes “that CERCLA excludes petroleum . . . [it
nevertheless] contends that the Navy contracted to perform remediation of contamination
encompassing a broader range of pollutants than those covered by CERCLA.” Id.

The Court finds that no genuine issue of material fact exists as to whether the Navy
breached its obligation under the Deed to perform remedial action with respect to the petroleum
contamination and that the government is entitled to summary judgment on this claim. Section
II.L of the Deed provides:

L. PETROLEUM. GRANTEE agrees, on behalf of itself and
its successors and assigns, and every successor in interest to the
Property herein described, or any part thereof, as a covenant running
with the land, that upon learning of any previously unidentified
release or threatened release of petroleum or petroleum derivative
(including without limitation [Methyl Tertiary Butyl Ether
(“MTBE”)]) from, on, under or about the Property and any related
soils or ground or surface waters, which may have been associated
with Department of Defense activities at or about the Property,
GRANTEE will notify GRANTOR by following the notification
procedures set forth in subsection K(5) above.

[ECF 66-2] at 282 (emphasis added). As stated above, the notification procedures in Section
II.K(5)(a) require that Hamilton notify the Navy “in writing within 90 days after learning of any
previously unidentified condition of the Property that suggests a response action is necessary.” Id.
(emphasis added). Therefore, before reaching the issue of whether the Navy has an obligation
under the Deed to remediate petroleum contamination, the Court must first determine if there is a
genuine issue with respect to whether such contamination constitutes a “previously unidentified
release or threatened release.” Id.

15
Relying on the FOST and the CRUP, the government asserts that “[t]he undisputed facts .
. . show that Hamilton ha[d] not learned of a previously unidentified release of petroleum.” [ECF
66] at 33. Rather, the government contends that “Hamilton purchased the [] Property fully aware
of the fact that it contained petroleum” and that “[t]he [June 13, 2019] Soil Report does not show
that the contaminant measurements relate to anything more than the petroleum already identified
by the Navy as extant on the [P]roperty pre-transfer.” Id. at 34. According to the government, it
“discharged [its] burden by showing an absence of evidence to support Hamilton’s case.” Id.
(citing Celotex, 477 U.S. 322-23). The Court agrees that the government has met its burden by
showing the absence of a genuine issue of material fact on the threshold determination of
whether the petroleum contamination constitutes a previously unidentified release or threatened
release.

The Deed states that the Navy “has found and determined that the [P]roperty is suitable
for transfer pursuant to the [FOST].” [ECF 66-2] at 275. It further states that “[t]he FOST . . .
reference[s] environmental conditions on the Property” and that Hamilton “acknowledges that it
has received copies of the . . . FOST . . . , and that all documents referenced therein have been
made available to [Hamilton] for inspection and copying.” Id. at 277. With respect to the CRUP,
the Deed states that “the Property is subject to the provisions of a certain [CRUP].” Id. at 276.
Both the FOST and CRUP identify existing petroleum contamination on the Property. See id. at
71, 294.

The FOST explains that “[t]he only outstanding environmental issues at the Property are
petroleum contamination in groundwater and residual contamination in soil.” [ECF 66-2] at 71.
Additionally, it states that “[t]he Property is affected by petroleum contamination in soil and
groundwater,” id. at 79, and provides a detailed explanation of the petroleum releases on the
Property, as well as on the adjacent property, id. at 79-80. With respect to Building 970—the
former gas station—it explains the following:

To protect the structural integrity of Building 970, excavation
activities were not conducted underneath the building footers or
internal walls. Limited petroleum hydrocarbon contamination is still
present in these areas . . . . An estimate of the volume of hydrocarbon
and metals-impacted soils remaining in place is 120 cubic yards.
Soil commercial/industrial [preliminary remediation goals] were
exceeded at one location on the Property . . . . Potential exposure is
limited because the soils are primarily covered with asphalt and,
with exception of the areas around the Building 970 foundation, are
located at depths greater than 6 feet. Since the potential for exposure
would likely be greater by disturbing the soils than leaving them in
place and the concentrations are likely to continue to decline due to
natural biodegradation processes, the soils will be left in place.

Id. at 83. Like the FOST, the CRUP states:

The Property is affected by petroleum contamination in soil and
groundwater. Petroleum hydrocarbon contamination is present in the

16
soil of all parcels of the Property. Petroleum hydrocarbon and
metals-impacted soil is present in the soil under a portion of
Building 970 . . . . Benzene and Ethylbenzene are each present in
groundwater underlying most of the Property and [MTBE] is present
in groundwater underlying all parcels of the Property.

[ECF 66-2] at 294. Based on the contents of the FOST and the CRUP, the government has
established that petroleum contamination was present throughout the Property at the time of
transfer and that the petroleum contamination at issue does not constitute a previously
unidentified release or threatened release.

To succeed in its opposition, Hamilton must present evidence sufficient to demonstrate
that there is a genuine issue as to whether the petroleum contamination constitutes a previously
unidentified release or threatened release. See Celotex, 477 U.S. at 323-24. To that end, Hamilton
asserts that “the extent of the petroleum contamination was far larger than identified in the
FOST,” [ECF 67] at 26; that “petroleum-contaminated soil in locations on the Property [went]
well beyond the footprint of Building 970,” id. at 27; and that “the FOST [] underestimated the
severity of the contamination,” id. at 28-29. As a result, Hamilton states that it “was required to
excavate 10,680 tons of contaminated soil . . . [and that t]his is exponentially more contaminated
soil than the FOST anticipated,” which shows that “the remaining petroleum contamination at
the time of the transfer was not limited to just 120 cubic yards.” Id. at 26-27. Hamilton relies on
an October 9, 2019, report by its environmental consultant to demonstrate the severity of the
petroleum contamination on the Property. See id. 27-28; [ECF 70] at 4. Because Hamilton
misinterprets the FOST and fails to present evidence that the petroleum contamination
constituted a previously unidentified release or threatened release, Hamilton has not shown that a
rational trier of fact could resolve this issue in its favor.

Contrary to Hamilton’s assertion, the FOST did not “represent[] that the remaining
petroleum contamination was limited [to] the footprint of former Building 970 and amounted to
only 120 cubic yards of soil.” [ECF 67] at 12. Instead, it explains that “excavation activities were
not conducted underneath [Building 970]” and that, therefore, approximately 120 cubic yards of
contaminated soils remain in place in these areas. [ECF 66-2] at 83. Critically, the FOST further
makes clear that petroleum contamination affects the entire Property. See id. at 79 (stating that
“the Property is affected by petroleum contamination in soil and groundwater” and that “[a]n
MTBE plume is present in groundwater and extends beneath all parcels of the Property”). This
acknowledgement of petroleum contamination is mirrored in the CRUP, which states that
“[p]etroleum [] contamination is present in the soil of all parcels of the Property.” [ECF 66-2] at
294. Consequently, the FOST and the CRUP do not support Hamilton’s assertion regarding the
limited extent of the remaining petroleum contamination at the time of the transfer.

Furthermore, Hamilton has not presented any evidence that demonstrates that the
petroleum contamination at issue constitutes a previously unidentified release or threatened
release. Section II.L requires that Hamilton provide the Navy with notice of “any previously
unidentified release or threatened release of petroleum or petroleum derivative . . . from, on,
under or about the Property and any related soils or ground or surface waters.” [ECF 66-2] at
282. Even if the October 9, 2019, consultant report relied upon by Hamilton demonstrates that

17
the extent of the petroleum contamination from the Navy’s activities was larger, more
widespread, and more severe than indicated in the FOST, it does not demonstrate that the
petroleum contamination constitutes a previously unidentified release or threatened release.
Rather, based on the evidence, a rational trier of fact could only conclude that the petroleum
contamination at issue originated from either the petroleum release or threatened petroleum
release already identified in the FOST and CRUP.

This conclusion is supported by the text of the FOST and CRUP. In addition to indicating
that “[t]he Property is affected by petroleum contamination in soil and groundwater,” [ECF 66-2]
at 79, the FOST also identifies the potential threatened release of petroleum due to such
contamination, id. at 83. It states:

Potential exposure is limited because the soils are primarily covered
with asphalt and, with exception of the areas around the Building
970 foundation, are located at depths greater than 6 feet. Since the
potential for exposure would likely be greater by disturbing the soils
than leaving them in place and the concentrations are likely to
continue to decline due to natural biodegradation processes, the soils
will be left in place.

Id. Similarly, under the CRUP, Hamilton is required to provide written notice to a subsequent
purchaser of the Property, [ECF 66-2] at 299-300, “that a release of hazardous substances has
come to be located on or beneath the Property,” id. at 300. This further indicates that there was a
known release of petroleum on the Property. It is also evident from the CRUP that a threatened
release of petroleum had been identified. To protect against the known threatened release of
petroleum, the CRUP prohibits Hamilton from “conduct[ing] activities which will disturb the soil
at or below 5 feet below the current ground surface” throughout the Property, without prior
approval from the Navy, RWQCB, and DTSC. Id. at 301. For the areas under Building 970, the
prohibition applies to “the soil at or below 3 feet below the current ground surface.” Id. at 302.
These prohibitions are mirrored in the Deed. See id. at 279-80. These terms clearly identify the
prior release or threatened release of petroleum on the Property, such that the petroleum
contamination at issue cannot be qualified as “previously unidentified.” Since there is no genuine
issue of material fact regarding whether the petroleum contamination constitutes a “previously
unidentified release or threatened release,” Hamilton has not satisfied the threshold requirement
to trigger the alleged remediation obligation by the Navy, and the Court need not address
whether the Navy has an obligation under Sections II.L and II.K(5) of the Deed to remediate the
petroleum contamination. 6

6
In response to a government interrogatory, Hamilton stated that it “is currently unaware of the date or details
regarding any unidentified release of petroleum at the [] Property.” [ECF 66-1] at 114. After briefing on the
government’s motion for summary judgment was complete, Hamilton filed a motion to amend this response, among
others, by deleting this statement and inserting that “[i]nformation produced in discovery demonstrates that the
majority of the petroleum contamination discovered by Hamilton at the [] Property was previously undiscovered
because the petroleum contamination was larger, more expansive, and more severe than was disclosed in the Navy’s
FOST and other transaction documents.” Pl.’s Mot. [ECF 84] at 16-17 (emphasis omitted). The government opposed
Hamilton’s motion. [ECF 85]. Although the Court has not yet ruled on Hamilton’s request to amend its discovery
responses, even if the Court were to grant the motion, the Court would still find that Hamilton has failed to produce

18
D. The Navy’s Duty of Good Faith and Fair Dealing

The government argues that “Hamilton’s implied breach of good faith and fair dealing
claim . . . cannot stand” because “Hamilton seeks to expand the Navy’s contractual duties beyond
those in the Deed.” [ECF 66] at 40. The government contends:

Hamilton’s breach claim is unsupported by the fundamental facts
and law underlying the case because: (1) Hamilton never provided
notice to the Navy of any alleged breach, (2) Hamilton never
discovered any previously unidentified release of petroleum, (3)
Chloroform was not stored, disposed of, or released at the []
Property prior to the date of transfer; (4) Hamilton has not produced
any evidence that chloroform existed on the [] Property prior to
transfer; and (5) as this Court has already ruled, Hamilton had no
reasonable expectation that the Navy was required to ensure that the
[] Property remained suitable for commercial use after the date of
transfer . . . .

Id. at 38. According to the government, Hamilton’s breach of the implied duty of good faith and
fair dealing claim “is factually and legally unsupportable,” and therefore, the Court should grant
summary judgment in its favor. Id.

Hamilton argues that the government’s assertions are inaccurate and that “the Navy has
frustrated Hamilton’s efforts to receive the fruit of the Deed by willfully ignoring Hamilton’s
notices, by failing to ensure a commercially useable property after notice of new contamination,
and by disregarding evidence of new contamination.” [ECF 67] at 32. According to Hamilton, its
“reasonable expectation under the Deed was that the Navy would convey the Property in a
condition suitable for commercial use, subject to the restrictions in the FOST and the [CRUP],”
id. at 33, and that “Hamilton ‘reasonably expected’ the Navy to transfer a commercially
developable property as part of the sale and ensure previously unidentified contamination was
addressed,” id. citing Centex Corp. v. United States, 395 F.3d 1283, 1305 (Fed. Cir. 2005)).
Hamilton states that “[t]he Navy has failed to ensure that the Property is commercially suitable in
response to new, previously unidentified contamination per the fruits of the Deed,” id., and that
“Hamilton is not asking the Navy to maintain commercial uses in perpetuity; it is asking the
Navy to help bring the Property to commercial standards when new, previously unidentified
contamination is detected,” id.

The Court agrees with the government that, based on the evidence, Hamilton’s claim for
breach of the implied duty of good faith and fair dealing is unsupported and that the government
is entitled to judgment as a matter of law. “Every contract, including one with the federal
government, imposes upon each party an implied duty of good faith and fair dealing in its
performance and enforcement.” Dobyns v. United States, 915 F.3d 733, 739 (Fed. Cir. 2019)
(citing Metcalf Constr. Co., Inc. v. United States, 742 F.3d 984, 990 (Fed. Cir. 2014)). “The

any evidence showing that the petroleum contamination at issue constitutes a previously unidentified release or
threatened release.

19
implied duty of good faith and fair dealing is limited by the original bargain: it prevents a party’s
acts or omissions that, though not proscribed by the contract expressly, are inconsistent with the
contract’s purpose and deprive the other party of the contemplated value.” Metcalf, 742 F.3d at
991. “Failure to fulfill that duty constitutes a breach of contract.” Id. at 990. “[W]hile the implied
duty exists because it is rarely possible to anticipate in contract language every possible action or
omission by a party that undermines the bargain, the nature of that bargain is central to keeping
the duty focused on ‘honoring the reasonable expectations created by the autonomous
expressions of the contracting parties.’” Id. at 991 (quoting Tymshare, Inc. v. Covell, 727 F.2d
1145, 1152 (D.C. Cir. 1984)). Thus, “[t]he implied duty of good faith and fair dealing cannot
expand a party’s contractual duties beyond those in the express contract or create duties
inconsistent with the contract’s provisions.” Precision Pine & Timber, Inc. v. United States, 596
F.3d 817, 831 (Fed. Cir. 2010) (citing Centex Corp. v. United States, 395 F.3d 1283, 1304-06
(Fed. Cir. 2005)). Further, while “a breach of the implied duty of good faith and fair dealing does
not require a violation of an express provision in the contract,” Dobyns, 915 F.3d at 739 (quoting
Metcalf, 742 F.3d at 994) (internal quotation marks omitted), “a specific promise must be
undermined for the implied duty to be violated,” Dobyns, 915 F.3d at 739.

Here, Hamilton claims that the Navy breached the implied duty of good faith and fair
dealing by failing to perform ongoing corrective action and remediation required by the Deed
with respect to newly discovered chloroform and petroleum to ensure that the Property is suitable
for commercial use. [ECF 67] at 33-34. However, this claim is either unnecessary given the
express terms of the Deed or insufficiently tethered to such express terms. With respect to the
chloroform, the Deed itself defines the Navy’s remediation obligations in Section II.K(3). See
[ECF 66-2] at 281. Therefore, the express terms of the Deed will settle the parties’ rights
regarding chloroform remediation, and “the duty of good faith and fair dealing [has] no role to
play” in resolving this claim. See BGT Holdings LLC v. United States, 984 F.3d 1003, 1016-17
(Fed. Cir. 2020) (affirming dismissal of a claim for breach of good faith and fair dealing where
the express terms of the contract provide the plaintiff a mechanism for obtaining relief).

With respect to the petroleum contamination, the express terms of the Deed in Section
II.L and II.K(5) could be interpreted to obligate the Navy to remediate previously unidentified
releases or threatened releases of petroleum. See [ECF 66-2] at 281-82. However, as discussed
above, Hamilton did not produce any evidence that the petroleum at issue constitutes a
previously unidentified release or threatened release. As such, Hamilton’s claim based on the
express terms of the Deed failed. Consequently, any obligation the Navy had to further remediate
the existing petroleum contamination on the Property would need to be established based on the
implied duty of good faith and fair dealing. Yet, there is no evidence that the Navy promised to
perform additional remediation of the petroleum contamination that existed on the Property at
the time of transfer. To the contrary, the Deed explicitly states that “the Property is conveyed ‘as
is’ . . . without any representation, promise, agreement, or warranty on the part of the [Navy],”
except as provided in the Deed or by law. [ECF 66-2] at 277. Without a sufficient tether to the
terms of the Deed, the Court cannot use the implied duty of good faith and fair dealing to create
an obligation on the part of the Navy to further remediate the existing petroleum contamination
on the Property. See Dobyns, 915 F.3d at 740-41 (stating that “[i]nferring an implied duty . . .
without a tether to the contract terms, would fundamentally alter the balance of risks and benefits
associated with the [] agreement and cannot be the basis of a claim for breach of the implied duty

20
of good faith and fair dealing”). To create such an obligation would impermissibly expand the
Navy’s obligations beyond those bargained for in the Deed. See Precision Pine & Timber Inc.,
596 F.3d at 831 (finding that the government did not destroy the plaintiff’s reasonable
expectations under the contract because the parties did not contemplate the desired contractual
benefit).

V. CONCLUSION

Accordingly, the Court GRANTS-IN-PART and DENIES-IN-PART the government’s
motion for summary judgment [ECF 66]. The Court GRANTS the motion with respect to
Hamilton’s breach of contract claim due to the Navy’s alleged failure to remediate newly
discovered petroleum contamination and breach of the implied duty of good faith and fair
dealing claim and DENIES the motion with respect to Hamilton’s breach of contract claim due
to the Navy’s alleged failure to remediate newly discovered chloroform.

Additionally, in connection with the government’s motion for summary judgment,
Hamilton filed a motion requesting that the Court take judicial notice of “the 2005 and 2019
[RWQCB] Environmental Screening Levels [(“ESLs”)],” [ECF 67-1] at 1, and a motion to
amend and supplement its discovery responses, [ECF 84]. The Court GRANTS the motion for
judicial notice because the RWQCB ESLs “can be accurately and readily determined from
sources whose accuracy cannot reasonably be questioned.” Fed. R. of Evid. 201(b)(2); see
Mobility Workx, LLC v. Unified Pats., LLC, 15 F.4th 1146, 1151 (Fed. Cir. 2021) (taking judicial
notice of published government documents). The Court DENIES AS MOOT Hamilton’s request
to amend its discovery responses, [ECF 84].

IT IS SO ORDERED.

s/ Thompson M. Dietz
THOMPSON M. DIETZ, Judge

21

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/11100154. Public record. Not legal advice.