Eden Isle Marina, Inc. v. the United States 0

In the United States Court of Federal Claims

No. 07-127 C

(Filed: October 29, 2013)

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EDEN ISLE MARINA, INC., *

* RCFC 52(c), Motion for Judgment on

Plaintiff, * Partial Findings; Concession Lease to

* Operate a Marina; United States Corps of

v. * Engineers; Political Influence; Breach of

* Contract; Fifth Amendment Takings;

THE UNITED STATES, * Statute of Limitations

*

Defendant. *

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Marian M. McMullan and Patrick R. James, Little Rock, AR, for plaintiff.

Vincent D. Phillips, United States Department of Justice, Washington, DC, for defendant.

OPINION AND ORDER

SWEENEY, Judge

Plaintiff Eden Isle Marina, Inc. operates a commercial marina located on a lake owned by

the United States Corps of Engineers (“Corps”). It contends that the Corps breached the

commercial concession leases governing its operation of the marina by thwarting its repeated

attempts to develop its leasehold as permitted by the express terms of the leases. It further

contends that the Corps deprived it of its property without just compensation in violation of the

Fifth Amendment of the United States Constitution. After hearing plaintiff’s case-in-chief at

trial, it is crystal clear that the Corps–from its civilian leadership at headquarters through its

personnel in the local office–breached its contracts and grievously wronged plaintiff. It is

equally clear that one of plaintiff’s elected representatives actively worked against plaintiff to

prevent it from developing its leasehold. Plaintiff stood no chance to enjoy the benefit of its

contracts with the Corps in the face of the political forces aligned against it.

However, despite plaintiff’s presentation of an extensive record documenting the

deleterious treatment it suffered at the hands of the government, it has failed to establish that it is

entitled to relief from this court. Most of plaintiff’s claims are barred by the statute of

limitations, and plaintiff has not established that it can recover on the merits of its remaining

claims. Thus, the court must grant defendant’s motion for judgment on partial findings under

Rule 52(c) of the Rules of the United States Court of Federal Claims (“RCFC”), and dismiss

plaintiff’s suit. Given the unavailability of judicial relief and the Corps’ reprehensible treatment

of plaintiff, the court strongly urges plaintiff to pursue redress from the United States Congress.

TABLE OF CONTENTS

FACTS ............................................................................................................................................ 7

I. Early 1960s to Early 1995: Background................................................................................ 7

A. Greers Ferry Lake ............................................................................................................. 7

B. Eden Isle and Eden Isle Marina......................................................................................... 8

C. Sale of Eden Isle Marina ................................................................................................. 13

1. Richard Upton .............................................................................................................. 14

2. Ronnie Walters............................................................................................................. 14

3. The Offers to Purchase the Marina .............................................................................. 15

4. Closing the Purchase of the Marina ............................................................................. 15

II. June 1995 to October 1996: Plaintiff’s Operation and Development of Eden Isle Marina

Until the Cease-and-Desist Order ............................................................................................. 18

A. Immediate Repairs to the Marina .................................................................................... 18

B. Plaintiff’s Plans to Develop the Marina .......................................................................... 18

1. Initial Opposition to Plaintiff’s Plans to Develop the Northern Portion of the Marina’s

Lease Area ........................................................................................................................ 19

2. Candidate Marion Berry Becomes Involved................................................................ 20

3. Plaintiff’s Formal Development Request..................................................................... 20

C. Opposition to Plaintiff’s Development Plan Builds ........................................................ 22

1. Immediate Opposition to Plaintiff’s Development Plan .............................................. 22

2. The April 18, 1996, and May 15, 1996 Meetings ........................................................ 24

3. Arkansas’s Congressional Delegation Becomes Involved .......................................... 25

4. The Corps’ Rejection of Plaintiff’s Long-Term Development Plan ............................ 26

5. The Corps’ Efforts to Keep the Congressional Delegation Informed.......................... 27

6. The Eden Isle Property Owners Continue to Assert Their Opposition and Seek the

Support of Their Congressional Delegation and Mr. Berry .............................................. 28

7. The Assistant Secretary, Martin Lancaster, Becomes Involved .................................. 30

D. The Corps Concludes That There Were Docks Outside of the Marina’s Lease Area .... 31

E. Plaintiff’s Addition of Boat Slips to Existing Docks at the Marina ................................ 34

F. Mr. Lancaster’s Visit to Eden Isle ................................................................................... 35

G. The Cease-and-Desist Order ........................................................................................... 37

III. November 1996 to February 1999: Plaintiff’s Operation of Eden Isle Marina Under the

Cease-and-Desist Order Until the Memorandum of Understanding......................................... 43

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A. Plaintiff’s April 1997 Lawsuit Against Mr. Upton ......................................................... 44

B. Plaintiff’s February 1998 Meeting With the Corps ......................................................... 45

C. A New District Engineer for the Little Rock District ..................................................... 47

1. Tension Between Mr. Berry and Colonel Morris ........................................................ 47

2. The Arrival of Colonel Holden .................................................................................... 49

D. Plaintiff’s August 12, 1998 Request for New Boat Slips ............................................... 49

E. The Corps’ Consideration of Plaintiff’s Request ............................................................ 50

1. The Corps’ Internal Discussions .................................................................................. 50

a. The Docks Purportedly Outside of the Lease Area .................................................. 52

b. Alternative Marina Sites .......................................................................................... 53

2. Requesting Additional Information From Plaintiff...................................................... 54

3. Colonel Holden’s Opinion on Plaintiff’s Earlier Attempt to Develop Eden Isle Marina

........................................................................................................................................... 54

4. Recommendations Made to Colonel Holden Regarding Plaintiff’s Development

Request .............................................................................................................................. 55

a. Advice From the Office of Counsel ......................................................................... 55

b. Advice From Real Estate Division Counsel ............................................................ 57

c. Summary of Legal Advice ....................................................................................... 59

5. Input From Mr. Berry .................................................................................................. 60

6. Colonel Holden Decides Upon the Corps’ Approach to Plaintiff’s Request ............... 62

7. The Corps’ Overall Treatment of Plaintiff’s Request .................................................. 63

F. The Corps Presents Its Proposal to Plaintiff .................................................................... 64

1. The November 10, 1998 Meeting ................................................................................ 64

2. The January 1999 Meetings ......................................................................................... 67

3. Meeting at the Cove Creek Park Marina Site .............................................................. 68

4. Support for Plaintiff’s Request .................................................................................... 69

G. The Corps Presents Its Proposal to the Eden Isle Property Owners ............................... 71

H. The Memorandum of Understanding .............................................................................. 72

1. The Corps Reduces Its Proposal to Writing................................................................. 72

2. The February 2, 1999 Meeting..................................................................................... 74

3. Funding the Work at Cove Creek Park ........................................................................ 75

a. Corps Budgeting and Appropriations....................................................................... 75

i. Priorities and Rankings ......................................................................................... 78

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ii. Congressional Adds ............................................................................................. 79

iii. Reprogramming of Appropriated Funds............................................................. 80

b. Interpretations of “as Funds Become Available”..................................................... 80

4. The Corps’ Reaction to Obtaining a Signed Agreement ............................................. 81

IV. February 1999 to April 1999: Efforts Taken Under the Memorandum of Understanding

Prior to the Execution of a New Lease ..................................................................................... 82

A. Efforts to Obtain Funding to Allow for Development at Cove Creek Park.................... 82

1. The Corps’ Efforts ....................................................................................................... 82

2. Plaintiff’s Efforts ......................................................................................................... 84

B. Plaintiff’s Efforts to Build a Marina at Cove Creek Park ............................................... 85

C. Choosing a Marina Site at Cove Creek Park ................................................................... 86

D. Updating the Greers Ferry Lake Master Plan ................................................................. 86

E. Executing a New Lease ................................................................................................... 87

F. Justifying the Alteration of Eden Isle Marina’s Lease Area Boundary ........................... 89

V. April 1999 to June 2005: Plaintiff’s Attempts to Develop at Cove Creek Park Under the

1999 Lease ................................................................................................................................ 91

A. The Lease Area for the Future Marina at Cove Creek Park............................................ 91

B. Plaintiff’s Initial Push to Begin Work at Cove Creek Park............................................. 92

C. Continued Pursuit of Funding ......................................................................................... 92

1. Congressional Add ....................................................................................................... 92

2. The Project Office’s FY 2002 Budget Request ........................................................... 93

3. Funding for the Design of the Access Road ................................................................ 93

D. Environmental Litigation Concerning the Greers Ferry Lake Shoreline Management

Plan ....................................................................................................................................... 94

1. The National Environmental Policy Act of 1969 ........................................................ 94

2. Issuing a New Shoreline Management Plan ................................................................ 95

E. Mr. Walters’s Complaint to the Engineer Inspector General .......................................... 96

1. The June 27, 2000 Meeting.......................................................................................... 96

2. Mr. Walters Contacts the Engineer Inspector General’s Office .................................. 96

3. The Engineer Inspector General Initiates an Inquiry ................................................... 97

4. The Preparation of a Legal Opinion............................................................................. 97

5. The September 19, 2000 Conference Call ................................................................... 99

6. The November 1, 2000 Conference Call ................................................................... 101

7. The Directive From Corps Headquarters ................................................................... 101

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8. The Requested Schedule of Costs and Timetable ...................................................... 101

9. Further Efforts to Reprogram the Funds Pursuant to the Directive From Corps

Headquarters ................................................................................................................... 103

F. Mr. Walters Continues to Make Plans for the Marina at Cove Creek Park in 2001 ..... 107

G. The Continued Pursuit of Funding for the Work at Cove Creek Park Through the

Appropriations Process ....................................................................................................... 107

1. The Corps’ Budget Requests for FY 2004, FY 2005, and FY 2006.......................... 107

2. Congressional Efforts................................................................................................. 110

H. The Corps Conducts an Environmental Study at Cove Creek Park .............................. 110

I. Mr. Walters’s Continued Development Efforts in 2003 and 2004 ................................. 112

1. Cove Creek Park ........................................................................................................ 112

2. Eden Isle Marina ........................................................................................................ 112

J. The EIG Inquiry Is Reinstated........................................................................................ 112

VI. June 2005 to the Present: Plaintiff’s Attempts to Recover the Lease Area It Relinquished

Under the 1999 Lease ............................................................................................................. 116

A. Determining the Requirements for Requesting a Lease Area Expansion ..................... 116

B. Plaintiff Retains a Consultant to Perform an Environmental Study at Eden Isle Marina

............................................................................................................................................. 118

C. The Corps’ Budget Requests for FY 2007 and FY 2008 .............................................. 119

D. Plaintiff’s Request for Reinstatement of Its Former Lease Area at Eden Isle Marina.. 120

E. Plaintiff Files a Lawsuit Against the Corps................................................................... 121

F. Plaintiff’s Pursuit of Its Reinstatement Request ............................................................ 121

G. The Corps Constructs the Road to the Cove Creek Park Marina Site .......................... 125

SUMMARY OF EXPERT OPINIONS ...................................................................................... 131

I. Dr. Jerry Overton ................................................................................................................ 131

A. Credentials .................................................................................................................... 131

B. The Formulation of His Opinion ................................................................................... 132

C. His Opinions .................................................................................................................. 133

1. Eden Isle Marina ........................................................................................................ 133

2. Other Marinas on Greers Ferry Lake ......................................................................... 133

3. The Cove Creek Park Marina Site ............................................................................. 135

II. Roger Ross and John Miller, P.E. ..................................................................................... 136

A. Credentials .................................................................................................................... 136

B. The Formulation of Their Opinions .............................................................................. 136

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C. Their Opinions............................................................................................................... 138

III. Ronnie Walters................................................................................................................. 139

A. The Formulation of His Opinion ................................................................................... 139

B. His Opinion ................................................................................................................... 140

PROCEDURAL POSTURE ....................................................................................................... 140

DISCUSSION ............................................................................................................................. 141

I. RCFC 52(c) Motions .......................................................................................................... 141

II. Plaintiff’s Amended Complaint ........................................................................................ 141

III. The Statute of Limitations ............................................................................................... 142

A. Legal Standards ............................................................................................................. 142

1. Subject Matter Jurisdiction ........................................................................................ 142

2. Claim Accrual ............................................................................................................ 143

B. Breach of the 1995 Lease .............................................................................................. 143

C. Breach of the MOU and the 1999 Lease ....................................................................... 145

1. Failure to Perform Express Duties ............................................................................. 146

2. Misrepresentation ....................................................................................................... 148

3. Failure to Disclose Superior Knowledge ................................................................... 150

4. Implied Duty of Good Faith and Fair Dealing ........................................................... 152

D. Rescission of the MOU and the 1999 Lease ................................................................. 152

1. Duress ........................................................................................................................ 153

2. Failure of Consideration ............................................................................................ 153

3. Mutual Mistake of Fact .............................................................................................. 155

E. Fifth Amendment Taking .............................................................................................. 155

F. Summary of Viable Claims ........................................................................................... 156

IV. Express Contract Terms ................................................................................................... 156

A. Valid Contract ............................................................................................................... 157

B. Obligation or Duty Arising From the Contract ............................................................. 157

C. Breach of the Obligation or Duty .................................................................................. 157

D. Damages ........................................................................................................................ 160

V. Superior Knowledge ......................................................................................................... 161

VI. Implied Duty of Good Faith and Fair Dealing................................................................. 162

CONCLUSION ........................................................................................................................... 162

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FACTS

This section contains the court’s findings of fact as required by RCFC 52.1

I. Early 1960s to Early 1995: Background

A. Greers Ferry Lake

In the early 1960s, the federal government constructed the Greers Ferry Dam on the Little

Red River in north-central Arkansas. PX 236 at 138, 141-42; accord Jt. Stip. ¶¶ 1-2.

Construction of the dam created Greers Ferry Lake, PX 236 at 142, which is used for flood

control, power generation, the supply of municipal drinking water, and recreation, Tr. 1581

(Park). To construct the dam and lake, the federal government generally acquired all of the

affected land in the area up to an elevation of 476 feet (“fee acquisition line”), along with a

flowage easement up to an elevation of 491 feet. Id. at 1586-87 (Park). When the water in the

lake is at its normal elevation of 461 feet (“normal pool”), the lake covers more than 30,000

acres of water surface and is surrounded by a 276-mile land boundary. PX 236 at 143; accord

Jt. Stip. ¶ 2. The lake consists of two bodies of water–the upper lake to the northwest and the

lower lake to the southeast–connected by a narrow channel. PX 5; PX 236 at 142. Surrounding

the lake are eighteen parks that provide a variety of recreational facilities, including

campgrounds, boat launches, swim areas, and marinas. Jt. Stip. ¶ 3. The lake has seven million

annual visitors. Tr. 3601, 3677 (Murdock-McDaniel).

Greers Ferry Lake is owned by the United States, and is managed and operated by the

Corps. Am. Compl. ¶ 6; Jt. Stip. ¶¶ 8-9. To administer its responsibilities, the Corps maintains a

project office in Heber Springs, Arkansas, headed by a resident engineer/operations project

manager.2 The project office is overseen by the Corps’ district office in Little Rock, Arkansas.

During the 1990s, the commander of the Little Rock District, also known as the district engineer,

managed 850 employees and a $120 million budget, and was responsible for twenty-four lakes,

1

Some of the facts are undisputed by the parties: defendant admitted certain allegations

in plaintiff’s amended complaint (“Am. Compl.”) and the parties filed a Joint Stipulation of Facts

(“Jt. Stip.”). The court derives facts related to the procedural history of this matter from various

filings on the docket, including the original complaint (“Compl.”) and a published decision

regarding a discovery dispute. The remaining findings of fact are derived from the transcript of

testimony elicited at trial (“Tr.”) and the exhibits admitted into evidence during trial (“PX” or

“DX”). Citations to the trial transcript will be to the page number of the transcript and the last

name of the testifying witness; if more than one witness testified to the same fact, the court might

only cite to the testimony of one witness. And, where two copies of a single document have

been admitted into evidence, the court will cite to only one version of the document.

2

When Greers Ferry Lake was created, the head of the project office held the title of

“resident engineer.” This title was subsequently changed to “operations project manager.” The

court uses both terms, as appropriate.

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eleven locks and dams on the Arkansas River, seven hydropower plants, military construction,

permitting under the Clean Water Act, managing the Corps’ real estate, and emergency response.

Tr. 813-14, 999-1000 (Morris). The Little Rock District is part of the Southwestern Division

headquartered in Dallas, Texas. The division office, in turn, reports to the Corps’ headquarters

in Washington, DC.

Civilian oversight of the Corps’ development and management of the nation’s water

resources is provided by the Assistant Secretary of the Army (Civil Works) (“Assistant

Secretary”). In addition, the Corps maintains offices in each geographic division and district

dedicated to its various functional responsibilities, such as managing its real estate (including its

commercial concession leases), operating and maintaining its infrastructure, engineering and

designing its facilities, monitoring the environment, complying with relevant regulations, and

handling its legal affairs.

The Corps’ management and operation of Greers Ferry Lake is guided, in part, by a

Shoreline Management Plan.3 Id. at 1590-92 (Park). Under the Shoreline Management Plan, the

use of commercial marinas is encouraged due to restrictions placed on the construction of private

docks. Id. at 1788 (Park), 2323 (Holden). The Corps’ management and operation of the lake is

further guided by the Greers Ferry Lake Master Plan, id. at 1930-31 (Park), 3945-48 (Overton);

PX 236, a document the Corps maintains in both the project office and the district office,4 Tr.

3945 (Overton).

B. Eden Isle and Eden Isle Marina

As of March 2011, there were nine marinas on Greers Ferry Lake under the Corps’

purview. PX 5. Seven of the marinas are located in parks operated by the Corps: those at

Choctow Park, Dam Site Park, Heber Springs Park, Hill Creek Park, Narrows Park, Shiloh Park,

and Sugar Loaf Park. PX 6. The other two marinas, Fairfield Bay Marina and Eden Isle Marina,

are not located in Corps-managed parks. PX 5. Fairfield Bay Marina is located adjacent to and

operated by the retirement and resort community of Fairfield Bay.5 Id.; PX 367. Eden Isle

Marina is also located within a resort community, Jt. Stip. ¶¶ 4-5, on the east side of a peninsula

3

The first Shoreline Management Plan, then called a Lakeshore Management Plan, was

adopted in 1974 or 1975. PX 35; PX 224 at 2. It was subsequently updated in 1976, 1982, 1994,

and 2002. PX 224 at 2, 6. The Corps withdrew a 2000 revision of the plan in response to a

lawsuit challenging its validity. Id. at 3. That lawsuit is addressed in more detail below.

4

Counsel for the parties explained the existence of two versions of the Greers Ferry

Lake Master Plan during the pretrial conference and at trial. See Tr. 1438-39 (statement of

plaintiff’s counsel).

5

Specifically, Fairfield Bay Marina is located in a park that the Corps leases to Fairfield

Bay, and Fairfield Bay, in turn, subleases the marina to Fairfield Bay Community Club, Inc. PX

368.

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on the south shore of the lower lake (“Eden Isle”), Am. Compl. ¶ 9; PX 5. The Eden Isle

community consists of primary residences and vacation homes, Jt. Stip. ¶ 4, and is “noted for

being one of the most exclusive retirement recreational locations in the state of Arkansas,” Tr.

4722 (Walters). The community is governed by the Eden Isle Property Owners Association

(“EIPOA”).

Eden Isle Marina–established in the early 1960s–preexisted most of the residential

development on Eden Isle, PX 25, and was one of the original marinas on Greers Ferry Lake,

Am. Compl. ¶ 8. The Corps initially leased the marina to The First Pyramid Life Insurance

Company of America, Inc. (“First Pyramid”). PX 21 at 1, 10. The Corps and First Pyramid

executed a new lease in 1970–lease DACW03-1-70-886 (“the 1970 lease”)–to conform with a

proposed change to an agency regulation. Id. at 1, 12. The lease area encompassed by the 1970

lease was described as:

That part of the north 825 feet of the SE¼ of the NE¼ and the south 1,000

feet of the NE¼ of the NE¼ of the Fractional Section 18, Township 10 North,

Range 10 West of the 5th P.M., Cleburne County, Arkansas, lying between the

434-foot contour and the Government fee taking line, and containing 21.0 acres,

more or less.

Also, beginning at a point which is 120 feet east and 75 feet north of the

southwest corner of the NW¼ of the SE¼ of Fractional Section 18, Township 10

North, Range 10 West of the 5th P.M., Cleburne County, Arkansas; thence north

26° east 300 feet to a point; thence south 84° 30′ east 515 feet to a point; thence

south 15° 45′ west 260 feet to a point; thence north 86° 45′ west 575 feet to the

point of beginning, and containing 3.3 acres, more or less.

These two parcels contain in the aggregate 24.3 acres, more or less.

Id. at 3. There is language in the 1970 lease suggesting that the lease area was depicted on a map

attached to the lease as Exhibit A, see id. at 1 (“Said premises are designated in red on Exhibit

‘A’ attached hereto and made a part hereof.”), but no such exhibit was included in the 1970 lease

admitted into evidence at trial,6 see id. at 1-15 (containing the 1970 lease).

According to the provisions of the 1970 lease, in exchange for the payment of a

graduated rent, First Pyramid was permitted to “conduct . . . business in connection with the

recreational development of the premises for the general use of the public,” including:

6

Although no map was included in the 1970 lease admitted into evidence at trial, such a

map apparently exists. Plaintiff’s expert geologist and hydrogeologist, Dr. Jerry Overton,

reproduced in his expert report a map that he identified as the lease map referenced in the

replacement lease. See PX 190 at 57; Tr. 4206 (Overton). The map reproduced by Dr. Overton

does not bear a legend and is not marked as “Exhibit A.” See PX 190 at 57.

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(1) Sale of food, refreshments, packaged merchandise, fishing tackle, fish bait,

and other supplies.

(2) Sale of gasoline and lubricants.

(3) Rental of boats and motors.

(4) Sale of boats, motors, and accessories (optional).

(5) Furnishing facilities for mooring and docking privately-owned boats.

(6) Servicing, repairing, maintaining, and caring for privately-owned boats and

motors.

(7) Transportation of passengers by boats for hire.

Id. at 2, 4-5. First Pyramid was required to furnish certain, specified facilities (e.g., various types

of docks; a minimum number of boat slips; a parking lot and roads; and various buildings, boats,

motors, and equipment), and could “provide additional facilities and services at any time after

obtaining the written approval of the District Engineer.” Id. at 5, 13. More specifically, the lease

provided:

[First Pyramid] shall have the right, during the term of the lease, to erect such

structures and to provide such equipment upon the premises as may be necessary

to furnish the facilities and services authorized under [the lease], . . . provided,

however, that no structure may be erected or altered upon the premises unless and

until the design and proposed location or alteration thereof shall have been

approved in writing by the District Engineer.

Id. at 5. With respect to these latter two provisions, the Corps could not deny a development

request arbitrarily, unreasonably, or in bad faith. DX 55; Tr. 128 (Cabe), 2322, 2339 (Holden);

accord Tr. 827-28 (Morris) (noting that marina operators were typically allowed to expand

within their lease areas so long as the contractual and regulatory requirements were met).

However, the Corps would not authorize or direct First Pyramid to “make investments which are

inconsistent with an opportunity to make a fair profit on the total operations authorized for the

premises.” PX 21 at 5.

The initial term of 1970 lease was eighteen years and ten months. Id. at 1. First Pyramid

reserved the right to relinquish the lease at the end of a lease year by giving the Corps notice six

months in advance. Id. On the other hand, the Corps could only revoke the lease in certain

circumstances:

The Government may revoke this lease at any time by giving 30 days written

notice by the District Engineer to the lessee in the event the lessee violates any of

the terms and conditions of this lease and continues and persists in such violation

for a period of 90 days after the District Engineer had advised the lessee of such

violation in writing.

Id.

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The provisions of the 1970 lease were amended on numerous occasions through the

execution of supplemental agreements. Jt. Stip. ¶ 23. Several supplemental agreements

memorialized the transfer of the lease to new lessees. PX 21 (supplement agreements 1-2, 7, 13,

18, 20-22). Others reflected extensions of the term of the lease–ultimately to December 31,

2012–and adjustments to the calculation of rent payments. Id. (supplemental agreements 3, 5, 8-

9, 13, 19). There were also supplemental agreements that contained revisions to the list of

required facilities. Id. (supplemental agreements 8, 10-11, 13-16). And two supplemental

agreements reflected changes to the description of the lease area. Id. (supplemental agreements

6, 19).

The first supplemental agreement affecting the lease area description, supplemental

agreement 6, was executed on December 10, 1980, and reflected an expansion of the lease area,

amending the description of the lease area to: “Two parcels of land and water area situated in the

E½ of Fractional Section 18, Township 10 North, Range 10 West of the 5th Principal Meridian,

Cleburne County, Arkansas, and containing 61.3 acres, more or less, of which 18.6 acres lie

above elevation 461′ mean sea level.”7 Id. at 34. The parties to the lease purportedly attached a

revised Exhibit A to this supplemental agreement, id., but no such exhibit was included with the

supplemental agreement admitted into evidence at trial,8 see id. at 33-35 (containing

supplemental agreement 6).

The lease area was again altered with the execution of supplemental agreement 19 on

September 14, 1993; however, on that occasion, the lease area was reduced through the removal

of a small parcel of land near Lake Eden, PX 35; Tr. 4222 (Overton), to:

One parcel of land and water area situated in the E½ of Fractional Section 18,

Township 10 North, Range 10 West of the Fifth Principal Meridian, Cleburne

County, Arkansas, and containing 51 acres, more or less, of which approximately

10 acres lie above the 461-contour, National Geodetic Vertical Datum of 1929.

PX 21 at 84; cf. PX 116 (noting that the Corps’ standard operating procedure was to have a

“vague description of the lease parcel”). A revised Exhibit A–a map depicting the new lease

area–was included with this supplemental agreement. PX 21 at 86. The map showed that the

western boundary of the lease area–the land boundary–followed the fee acquisition line along the

7

According to Dr. Overton, this lease description was erroneous. His review of the

Corps’ files indicated that the lease area continued to include two parcels of land, a 51.3-acre

parcel and a 3.3-acre parcel, and that the Corps later corrected its error. Tr. 4213-14, 4637

(Overton).

8

Although no map was included in the supplemental agreement admitted into evidence

at trial, such a map apparently exists. Dr. Overton reproduced in his expert report a map that he

identified as the lease map referenced in the supplemental agreement. See PX 190 at 57; Tr.

4216 (Overton). The map reproduced by Dr. Overton does not bear a legend and is not marked

as “Exhibit A.” See PX 190 at 57.

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shoreline of Greers Ferry Lake. Id. At the north end of the land boundary, a line was drawn due

east into the water for an unspecified distance, and at the south end of the land boundary, another

line was drawn to the southeast into the water for an unspecified distance. Id. The ends of these

two lines were connected by a smooth, convex, crescent-shaped curve, creating the eastern,

water boundary of the lease area. Id. The lease area was darkly shaded, and therefore did not

reveal what natural or man-made features were included within the lease area.9 Id.; see also Tr.

1814 (Park) (noting that no docks were depicted on the map). However, a map included in the

Greers Ferry Lake Master Plan–reproduced below as Figure 1–reflects that the eastern boundary

of the lease area extended into the water just far enough to include three berms jutting out from

Eden Isle: a berm in the northern portion of the lease area; a large, hook-shaped berm in the

middle portion of the lease area; and a shorter berm in the southern portion of the lease area. PX

236 at 48; see also PX 192 at 4 (depicting the lease area laid out over an aerial photograph of

Eden Isle Marina). Also depicted on the master plan map are the marina’s docks. PX 236 at 48.

However, because the master plan map was prepared more than five years after the execution of

supplemental agreement 19, see id. at 47-49, it is unclear which of these docks existed at the time

that the supplemental agreement was executed.

9

Because all versions of supplemental agreement 19 submitted by the parties contain a

map with dark shading, the court presumes that the dark shading exists on the original version of

the map in supplemental agreement 19. See PX 21 at 86; DX 17 at 3; DX 325 at 86; see also Tr.

1812 (Park) (testifying to an inability to locate a berm located in the shaded area).

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Figure 1

C. Sale of Eden Isle Marina

In September 1992, ownership of Eden Isle Marina was transferred to Amstar/First

Capital Joint Venture (“Amstar”). PX 21 (supplemental agreement 18). Amstar then put the

marina up for sale in 1995. Tr. 4739-40 (Walters). Despite being in disrepair due to absentee

ownership and deferred maintenance, id. at 111, 136 (Cabe), 204-05 (Ragar), 1678 (Park), 4736-

37, 5329-30 (Walters), the marina had an appraised value of $1,800,000, id. at 4739-40

(Walters), and there were at least two individuals interested in purchasing the marina: Richard

Upton and Ronnie Walters.

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1. Richard Upton

The first interested individual was Mr. Upton, a businessman in the Heber Springs/Eden

Isle area. He is the majority owner of the Red Apple Enterprises Limited Partnership, DX 118,

which owns much of the property on Eden Isle, including the Red Apple Inn and Country Club

(“the Red Apple Inn”)–an “extremely popular” private country club and resort, Tr. 4723

(Walters); PX 173 at 49–and all of the undeveloped land, Tr. 4724 (Walters). The partnership at

one time also owned Eden Isle Marina, PX 21 (supplemental agreement 13), but lost it to

foreclosure, id. (supplemental agreement 18); PX 30, before Mr. Upton became the partnership’s

majority owner.

2. Ronnie Walters

Mr. Walters, the other interested and ultimately successful purchaser, was born in the

1940s–before the federal government built Greers Ferry Dam and created Greers Ferry Lake–on

the land that now constitutes Eden Isle. Id. at 4703, 4708 (Walters). He and his family were

farmers, and much of their land was taken by the government for the construction of the dam and

lake. Id. at 4704-05 (Walters). When Mr. Walters was sixteen years old, he began working for

the dock company that helped build the original Eden Isle Marina. Id. at 4703-05, 4711

(Walters). An employee of the dock company taught Mr. Walters how to scuba dive, a skill that

led him to being hired to set anchors and cables at several marinas, including Eden Isle Marina,

Shiloh Marina, Heber Springs Marina, Dam Site Marina, and Sugar Loaf Marina. Id. at 4705-06

(Walters). In addition, the Corps hired him to do work as a scuba diver on two or three

occasions. Id. at 4707 (Walters).

After helping build Eden Isle Marina, Mr. Walters joined the National Guard and worked

in the construction business for approximately ten years. Id. at 4711 (Walters). He then entered

the real estate business. Id. Finding work as a real estate broker to be “tough,” Mr. Walters

decided to diversify and become a real estate appraiser. Id. After taking the relevant courses, he

became an appraiser in 1974, earned an SRA designation from the Appraisal Institute in 1976,

and when Arkansas instituted a licensing requirement for appraisers, he obtained a certified

general appraiser’s license. Id. at 4711-13 (Walters); PX 214 at 166. Because Mr. Walters was

the only certified appraiser in the area, he performed almost all of the appraisals around Greers

Ferry Lake. Tr. 4713-14 (Walters). In fact, he appraised several of the marinas on the lake,

including Shiloh Marina, Heber Springs Marina, Dam Site Marina, Sugar Loaf Marina, and

Narrows Marina,10 and performed twenty-five appraisals for the Corps when the Corps was

trying to resolve certain eminent domain issues. Id. at 4706-07 (Walters). Mr. Walters

eventually turned over responsibility for performing commercial appraisals to his brother,

keeping his focus exclusively on residential appraisals. Id. at 4712 (Walters).

10

The lease for Narrows Marina was transferred in 1978, PX 250 at 23-26, and was

renamed Lacey’s Narrows Marina, see, e.g., PX 251-A at 1-2 (containing a letter on Lacey’s

Narrows Marina letterhead). However, for simplicity, the court refers to this marina throughout

this opinion as Narrows Marina.

-14-

In 1996, Mr. Walters sold his real estate business. Id. at 4715 (Walters). He retained his

appraisal business, however, until 2003 or 2004 to have a source of income that would help

support the marina. Id. Thus, Mr. Walters accumulated over twenty years of experience as a

real estate broker and approximately thirty years of experience as an appraiser in the Greers

Ferry Lake area. Id. at 4708, 4713, 4715, 4725, 5268 (Walters); PX 214 at 166.

In addition to his real estate and appraisal work, Mr. Walters was a founding member of

the Cleburne County Economic Development Commission, which was created to attract business

to the local area. Tr. 4718-19, 5268 (Walters). Through his twenty years of service on the

commission, he became knowledgeable about the area’s economic climate. Id. at 4718-20, 5268,

5289 (Walters). Moreover, because he has spent most of his life in the vicinity of Greers Ferry

Lake, both before and after the lake was created, and because most of his work revolved around

the lake, Mr. Walters possesses an extensive amount of knowledge about the lake in general, id.

at 4708 (Walters), and about Eden Isle in particular, id. at 4725 (Walters).

3. The Offers to Purchase the Marina

Before making an offer to purchase Eden Isle Marina, Mr. Walters visited the marina and

expressed his interest in owning and operating the marina to its manager. Id. at 4739, 5374

(Walters). The manager advised Mr. Walters that he was wasting his time because Mr. Upton

intended to purchase the marina. Id. at 4739 (Walters). Nevertheless, Mr. Walters sought

financing from several local banks, only one of which–The Cleburne County Bank–agreed to

loan him the money he needed for the purchase. Id. at 4738 (Walters); PX 22.

With financing in hand, Mr. Walters submitted a $1,500,000 offer to purchase Eden Isle

Marina, putting up $100,000 in earnest money. Tr. 4739-40 (Walters). Amstar subsequently

advised him that it had a competing offer, and asked if he wanted to raise his offer price. Id.

Although unknown to Mr. Walters at that time, the competing offer was made by Mr. Upton in

the amount of $700,000. Id. at 4740-41 (Walters). Mr. Walters raised his offer price to

$1,600,000, and became the successful offeror. Id. at 4739-40 (Walters); PX 76 at 1.

4. Closing the Purchase of the Marina

On May 8, 1995, Amstar and a corporation formed by Mr. Walters, Walters Investments,

Inc., executed an Asset Purchase and Sale Agreement for Eden Isle Marina. PX 20. The

agreement reflected that in exchange for the $1,600,000 purchase price, Mr. Walters would

receive the marina’s lease, improvements, inventory, equipment, contracts, supplies, licenses and

permits, books and records, warranties, and name. Id. The agreement also provided for a forty-

five-day due diligence period during which Mr. Walters could inspect the physical and economic

condition of the marina. Id.

During the due diligence period, Mr. Walters and his brother met with two employees of

the Corps’ Greers Ferry Lake Project Office: Carl Garner and Tommy Park. Mr. Garner was the

resident engineer, a position he had held from the date the lake was established, Tr. 1584 (Park),

-15-

and Mr. Park had been the chief ranger since 1992, id. at 1579 (Park). The main topic of the

meeting was Mr. Walters’s plans to expand Eden Isle Marina. DX 23. At the time the meeting

occurred–June 1, 1995–the lease area for the marina was identical to the lease area depicted in

Figure 1. PX 21. There was no development above the northern berm or below the southern

berm. Fig. 1. During the meeting, Mr. Walters noted that he had made a sizeable investment

and intended to run a profitable, first-class marina. Tr. 1709, 1712 (Park). To realize this goal,

he explained that he wished to, among other things, (1) immediately expand the marina to the

north and (2) reshape the bank/perform some “dredging” to make it easier to access the docks.11

Id. at 4744-45 (Walters); DX 23. Mr. Garner advised Mr. Walters that it would be difficult to get

a dock placed north of the northern berm due to objections from adjacent property owners and

that he personally objected to any development north of the northern berm. DX 23. Mr. Walters

indicated that it was his belief that since the area to the north of the northern berm was part of the

lease area, there was not much the public could say about his expansion plans. Id.

Mr. Walters then met with several individuals from the Little Rock District Office to

discuss his plans for Eden Isle Marina. Tr. 4748-51 (Walters). During the meeting, Mr. Walters

relayed Mr. Garner’s comments regarding the expansion of the marina; the district employees

told him that Mr. Garner thought of Greers Ferry Lake as “his lake,” but that the district office

had the final decision-making authority. Id. at 4746, 4748 (Walters); accord id. at 831 (Morris)

(noting that subject to the district engineer’s approval, the chief of the Real Estate Division

rendered the final decision on development requests); see also id. at 460 (Ward) (referring to Mr.

Garner as “Mr. Greers Ferry Lake”). Then, acknowledging that there was “extreme demand” for

boat slips on Greers Ferry Lake, the district employees advised Mr. Walters that the area north of

the northern berm was part of the lease area and there was no reason why he could not develop it,

but that they would prefer that he develop the southern part of the lease area first due to the

anticipated opposition to any northern development. Id. at 4748-51 (Walters). The district

employees then produced the then-current Shoreline Management Plan, which indicated that

adjacent property owners could not dictate the Corps’ management of government property. Id.;

accord id. at 5369 (Walters) (indicating that what the district employees advised him at this

11

In his notes from this meeting, Mr. Park characterized Mr. Walters’s desire to reshape

the bank as “dredging.” DX 23. Mr. Walters disputes this characterization, stating that all that

he wanted to do was bring in a backhoe during low water conditions (so that no water would be

disturbed) and pull up the bank. Tr. 4744-45 (Walters). However, the Corps’ notes from a

February 28, 1996 meeting with Mr. Walters reflect that Mr. Walters was aware at that time that

his proposed dredging, entailing the use of dredged material to build a parking area, would

require a permit, and that the Corps had previously provided Mr. Walters with all of the

necessary paperwork to apply for a permit. DX 41. Indeed, when the operator of Shiloh Marina

performed similar work in 1992 (the removal of rock and dirt from under a dock to the bank

above the ordinary high water mark for use in the construction of a parking lot), the Corps

characterized it as dredging. PX 334. Notably, the work at Shiloh Marina was performed

without the Corps’ prior approval; the Corps retroactively provided its authorization, id., and

there is no indication that the marina operator was cited or assessed a penalty for dredging

without permission, Tr. 3984 (Overton).

-16-

meeting was consistent with what Mr. Garner wrote in an February 23, 1995 memorandum (PX

227): “[O]wnership of land adjacent to the Government’s property conveys no special privileges

or use of that land. The Government owned land around Greers Ferry Lake is public property

and decisions regarding that land must be based on what is best for the general public.”).

During their meetings with Mr. Walters, Corps employees explained the process for

obtaining approval to further develop Eden Isle Marina. Am. Compl. ¶ 19. Generally, a marina

owner was required to submit to the Corps a written request along with a drawing depicting the

proposed development, Tr. 3916-17 (Overton), with two copies to be sent to the district office

and one copy to be sent to the project office, id. at 4763 (Walters). These procedures were not

set out in the lease, see PX 21, and there is no evidence in the trial record reflecting that the

Corps, or the Little Rock District in particular, had memorialized these procedures in writing.

Nevertheless, so long as the marina owner complied with all of the contractual and regulatory

requirements, the Corps would approve the development request. Tr. 827-28 (Morris), 2322

(Holden). Indeed, marina owners had (and have) a reasonable expectation to develop within

their lease areas. Id. at 2322 (Holden).

Corps employees also advised Mr. Walters that he would need to submit a five-year

development plan for the marina.12 Id. at 141, 143, 1533 (Cabe); DX 23 (reflecting that Mr.

Walters indicated during the June 1, 1995 meeting that he would submit a five-year plan to the

Corps). The submission of a five-year development plan was not required by the terms of the

lease. See PX 21. Nor is there any evidence in the trial record reflecting that the Corps, or the

Little Rock District in particular, had a written rule, regulation, or policy indicating that a marina

owner must submit a five-year development plan. See also Tr. 3892 (Overton) (noting that in

reviewing the Corps’ records, he “never saw any reference to a requirement of a five-year plan”).

Indeed, it does not appear that the Little Rock District requested five-year development plans

from any other marina on Greers Ferry Lake. See id. at 3890, 3892, 4075 (Overton) (remarking

that in his review of Corps files, he did not see a five-year master plan submitted by any other

marina).

Although Mr. Walters consulted with Corps personnel from the project and district

offices, he did not meet with any of the other marina operators on Greers Ferry Lake to discuss

their business relationships with the Corps. Id. at 5329 (Walters). Nor did Mr. Walters meet

with Amstar’s principals to discuss their relationship with the Corps; his only discussion about

Eden Isle Marina was with an Amstar employee–the marina’s manager. Id. at 5330 (Walters).

While Mr. Walters was conducting his due diligence, the Corps was engaged in its

process to approve Mr. Walters as a new lessee for Eden Isle Marina. Id. at 1677-78 (Park).

Although Mr. Walters had agreed to purchase the marina and assume the lease, the Corps wanted

to ensure that Mr. Walters possessed the necessary financial resources and business acumen to

12

It is unclear whether the requirement that plaintiff submit a five-year development

plan was separate and distinct from the requirement that plaintiff submit a request whenever it

wanted to add docks or boat slips at the marina.

-17-

run a viable business. Id. The Corps obtained a letter from Dale Miller, president of The

Cleburne County Bank, indicating that the bank had approved a $1,500,000 loan to Mr. Walters,

PX 22, and the Corps ultimately approved Mr. Walters as the new lessee, Am. Compl. ¶ 26.

Prior to finalizing his acquisition of Eden Isle Marina, Mr. Walters created a new

corporate entity that would own the marina and its assets: Eden Isle Marina, Inc. (“plaintiff”).

Tr. 5328, 5332 (Walters). Over several days in the middle of June 1995, plaintiff executed

several agreements with its lender, The Cleburne County Bank; the Corps, through Billy Cabe,

the chief of the Little Rock District’s Real Estate Division; and the existing owner and lessee,

Amstar. On June 15, 1995, the Corps, Amstar, and plaintiff executed supplemental agreement

22 to the 1970 lease, transferring the lease from Amstar to plaintiff, effective the following day.

Jt. Stip. ¶ 24; PX 24. Plaintiff and Amstar executed a separate Assignment and Assumption of

Lease on June 16, 1995. PX 24-B. That same date, plaintiff, its lender, and the Corps executed

an Agreement as to Lease Assignment, reflecting the parties’ understanding that the lease would

serve as collateral for plaintiff’s $1,500,000 loan to purchase and improve the marina. PX 24-A.

In accordance with this agreement, plaintiff assigned the lease to its lender. PX 24-C. The final

part of the transaction was plaintiff’s purchase of a separate property from Amstar: on June 14,

1995, but effective June 16, 1995, Amstar conveyed to plaintiff approximately 4.8 acres of land

adjacent to the marina. PX 23; Tr. 4729-30 (Walters). The property was conveyed to plaintiff

subject to the Corps’ flowage easement, PX 23; the easement affected approximately one-half

acre of the land, Tr. 4753 (Walters).

II. June 1995 to October 1996: Plaintiff’s Operation and Development of Eden Isle

Marina Until the Cease-and-Desist Order

A. Immediate Repairs to the Marina

When plaintiff assumed the lease in June 1995 (“the 1995 lease”), Eden Isle Marina had

580 boat slips, Jt. Stip. ¶ 26, distributed among a number of docks attached to and situated

between the lease area’s northern and southern berms, Fig. 1. There was no waiting list for boat

slips. Tr. 4741 (Walters). Among the first steps taken by Mr. Walters was to make a number of

repairs and improvements to the marina, including replacing rotten boards and screws, cleaning

out “old stuff,” and paving a parking lot. Id. at 4759 (Walters). Then, in July and August 1995,

the Corps approved additions to P dock and S dock, and the placement of a tire break. PX 190 at

14. Demand for boat slips at the marina soared. Tr. 4761 (Walters).

B. Plaintiff’s Plans to Develop the Marina

As noted above, Mr. Walters had discussed plaintiff’s plans to develop Eden Isle Marina

within the marina’s lease area during his initial meetings with the Corps. Plaintiff’s plans

included both developing the northern portion of the lease area and increasing the number of

boat slips available on the marina’s existing docks.

-18-

1. Initial Opposition to Plaintiff’s Plans to Develop the Northern Portion of the Marina’s

Lease Area

Plaintiff’s plan to develop the northern portion of Eden Isle Marina’s lease area was

immediately controversial with the Eden Isle property owners. The board of the EIPOA learned

about plaintiff’s plans after two of the property owners met with the marina’s manager. PX 26.

During the board’s November 8, 1995 meeting, these property owners reported that plaintiff was

planning to expand to the north of the existing marina, and requested that the board support them

in their opposition to the plan. Id. The board agreed to obtain a copy of the lease to ascertain

whether expansion was permitted and to consult with an attorney. Id. Later that month, the

board obtained a copy of the lease and forwarded it to the EIPOA’s attorney, Mike Beebe.13 PX

27.

Although plaintiff had not yet formally requested permission to develop the northern

portion of the lease area, in January 1996, Eden Isle property owners began to write letters to the

district engineer, Colonel Phillip Morris, in opposition to plaintiff’s plans to expand the marina,

with most of them sending a copy of their letters to Mr. Garner at the project office. PX 28; Tr.

1263, 1275 (Morris); see e.g., DX 362; DX 383. The property owners identified several reasons

for their opposition: increased commercial activity on Eden Isle’s shoreline; an increased

boating hazard; and lower property values due to the removal of trees. DX 362; DX 383.

The board of the EIPOA was also monitoring the situation at the marina. It was assisted

in this endeavor by Mr. Garner, PX 28, even though it was not Mr. Garner’s responsibility to

serve as the EIPOA’s watchdog, Tr. 829 (Morris). During a January 31, 1996 meeting, the

EIPOA’s president, Charles Ward, advised the board that Mr. Garner had advised him that he

would inform the board if and when plaintiff submitted a development request and that a public

meeting would be held on the request. PX 28. Notwithstanding Mr. Garner’s statement, there

was no statutory or regulatory requirement for the Corps to conduct a public meeting regarding a

marina’s request to expand within a marina’s existing lease area. Tr. 830 (Morris); see also id. at

1940 (Park) (indicating that there was no public meeting for Choctaw Marina’s 1996 lease area

expansion request), 3812 (Overton) (reporting that the Corps did not hold any public meetings

regarding the addition of docks at Narrows Marina, despite the existence of complaints). Indeed,

a request for a public meeting in these circumstances would be an extraordinary request subject

to legal review and approval by the district engineer. Id. at 833 (Morris).

13

At that time, Mr. Beebe was an Arkansas state senator, and he is currently the

governor of Arkansas. The court takes judicial notice of these facts pursuant to Rule 201(b)(2)

of the Federal Rules of Evidence (“FRE”). See Mike Beebe (1946–) [abstract], The

Encyclopedia of Arkansas History & Culture, http://www.encyclopediaofarkansas.net/

encyclopedia/entry-detail.aspx?entryID=4848# (last visited July 11, 2013).

-19-

2. Candidate Marion Berry Becomes Involved

During or shortly after February 1996, the EIPOA board and Wallace Fowler–a Greers

Ferry Lake property owner, id. at 1732 (Park)–informed Marion Berry of their issues with

plaintiff’s plan to develop the northern portion of Eden Isle Marina’s lease area. At that time,

Mr. Berry was campaigning for a seat in the United States House of Representatives (“House”),

id. at 747-49, 751-52 (Berry), after serving as a special assistant to the President for Agricultural

Trade and Food Assistance under President William Jefferson Clinton, id. at 652 (Berry). Mr.

Berry had met President Clinton in 1976, and when the former president was the governor of

Arkansas, he appointed Mr. Berry to the Arkansas Soil and Water Conservation Commission.

Id. at 651-52 (Berry). Mr. Berry considers himself to be a friend of the former president. Id. at

651 (Berry).

Mr. Berry met Mr. Fowler, who he described as an influential resident of northeast

Arkansas, during his congressional campaign. Id. at 647 (Berry). Mr. Fowler assisted with Mr.

Berry’s campaign, and the two became good friends. Id. Although Mr. Berry was limited in

what he could do for the Eden Isle property owners as a candidate, id. at 748 (Berry), he spoke

with the EIPOA’s president, Mr. Ward, several times about the marina’s development plans,14 id.

at 686-88 (Berry). Mr. Ward informed Mr. Berry that Eden Isle’s infrastructure could not

support a larger marina and that any further development would require amending the Shoreline

Management Plan. Id.

3. Plaintiff’s Formal Development Request

On February 27, 1996, Mr. Walters and his brother hosted a meeting at Eden Isle Marina

during which they presented plaintiff’s long-term expansion plan to Corps personnel, including

Anthony Ragar and Ellyce Best from the Little Rock District’s Real Estate Division, PX 230,

and Mr. Garner, Mr. Park, Chris Roark, and Jack Johnson from the project office. DX 41; see

also PX 51 (noting that Mr. Roark was a ranger); Tr. 620 (Cabe) (noting that Mr. Johnson

worked in the Operations Division). Mr. Walters proposed adding to the marina approximately

fifty boat slips per year for ten years to bring total number of boat slips at the marina to 1,062,

building a restaurant and dry boat storage, dredging, and redepositing the dredged material to

build a parking area. DX 41. Corps personnel raised concerns over cleared lands remaining idle

for an extended period of time, the sufficiency of parking, and the viability of a restaurant. Id.

In response to the parking issue, Mr. Walters indicated that he owned 4.8 acres of land adjacent

to the marina that could be used for parking. Id. Mr. Garner then advised Mr. Walters that the

residents of Eden Isle were opposed to Mr. Walters’s plan, and Mr. Walters agreed to hold a

14

These facts are derived from Mr. Berry’s deposition, which plaintiff used to impeach

Mr. Berry regarding his testimony at trial that he did not recall Mr. Ward or anyone from the

EIPOA calling him to enlist his assistance in defeating plaintiff’s expansion plans. Tr. 686-88

(Berry). Mr. Berry was deposed three years before he testified at trial. Because the deposition

was closer in time to the events at issue, and because of Mr. Berry’s hostile demeanor at trial, the

court finds Mr. Berry’s deposition testimony to be more credible.

-20-

public forum to explain the plan to the residents. Id.; see also Tr. 1731 (Park) (indicating that

Mr. Garner told Mr. Walters that the property owners’ objections “were good objections”).

Mr. Walters formally submitted a long-term development plan for the marina, identified

as “Master Plan for 1996-2006,” to the Corps on March 5, 1996. Am. Compl. ¶ 35; PX 29. Mr.

Walters submitted a ten-year development plan, as opposed to a typical five-year development

plan, because he wanted to do a good job, and he wanted to show the Corps that plaintiff’s intent

was to fully develop the lease area to satisfy the “astronomical” demand for boat slips. Tr. 4762-

63 (Walters). The plan mirrored the proposal Mr. Walters presented to the Corps several days

before. See PX 29 at 1. In his cover letter, Mr. Walters explained:

The attached plan is submitted for your approval of the concepts pending detailed

plans for the various elements of the plan. The concepts of particular importance

to us are as follows:

 Construction of a large boat dock on the north end of the lease in

1996-1997 consisting of 20-25 open slips for large boats. To have a

covered walkway and an integrated wavebreak.

 Opening up additional parking area on both ends of the lease area as

additional docks are constructed over the next ten years.

 Dredging for fill of parking lots and better low water operations above

contour 440' MSL on the north and south ends of the lease.

 Construction of a restaurant . . . on the existing jetty with provisions

for flotation or elevation on piers above 491['] MSL.

 Dry dock storage . . . in the lease area for future expansion near the

end of the planning period. To include a new launching ramp . . . for

launching dry docked boats.

The rest of the plan includes typical covered and open docks as demand

requires with approximately forty to fifty new slips added per year until capacity

is reached. It is our intention to build state-of-the-art facilities and to continue to

upgrade this marina to meet the needs of the recreational market.

We would greatly appreciate comments on these general comments,

understanding that more detail is necessary before actual construction begins.

Id. Mr. Walters specifically identified in the plan the docks plaintiff intended to build for each

two-year period (beginning with 1996-1997 and ending with 2004-2005) and their locations, as

well as the fact that the total number of new boat slips being proposed was 482. Id. at 2.

According to the plan, one of the first docks that plaintiff wanted to build would be situated in

-21-

the northernmost portion of the lease area. Id. That dock, Mr. Walters explained, would be for

large boats, and would serve as wave break for the marina and future development to the south.

Tr. 4765 (Walters).

C. Opposition to Plaintiff’s Development Plan Builds

1. Immediate Opposition to Plaintiff’s Development Plan

As previously instructed, Mr. Walters sent copies of plaintiff’s ten-year development plan

for Eden Isle Marina to the district office and the project office. PX 29 at 1. Once Mr. Garner

received the project office’s copy of the plan, he shared its contents with the residents of Eden

Isle. Tr. 142-44 (Cabe), 4763 (Walters). In fact, the district office began to receive complaints

about the plan before it received its own copies. Id. at 4763 (Walters).

Shortly after receiving plaintiff’s development plan, Mr. Garner prepared a brief

memorandum for the chief of the Real Estate Division, Mr. Cabe, containing some comments on

the plan. DX 44. After noting the Corps’ receipt of “numerous letters from individuals

expressing strong opposition to any further expansion” and Mr. Walters’s agreement to a public

forum, Mr. Garner wrote: “Where possible, we should seek ways to reduce any adverse impacts

including the denial or modification of all or parts of the request.” Id. Mr. Garner also

suggested that instead of the dredging and deposit of materials for future parking needs, plaintiff

be required to add parking incrementally as boat slips were added to the marina. Id.

Now that they had a concrete plan to oppose, Eden Isle residents initiated an organized

campaign against development of the marina. At the EIPOA’s annual membership meeting on

March 16, 1996, those members present voted unanimously to pass “a resolution supporting the

board’s adamant opposition” to the marina’s development. PX 32-A at 2. Throughout April

1996, Eden Isle property owners engaged in a letter-writing campaign to Colonel Morris in

opposition to plaintiff’s development plan; Mr. Garner was copied on many of the letters.15 Tr.

1263, 1275 (Morris); see e.g., PX 30; PX 32-A at 4-5; DX 384; DX 385; DX 388; DX 389; DX

391; DX 392; DX 393; DX 395; DX 398; DX 401; DX 406. The property owners identified a

number of reasons for their opposition, and many of them expressed the identical concerns:

increased traffic; security concerns; water safety hazards from the new docks; decreased property

values; the removal of trees and vegetation along the shoreline;16 the effects of dredging;

15

At least one property owner did include some positive comments regarding plaintiff’s

development plan in his letter. See DX 406 (“We do feel there could be a need to ‘upscale’ the

existing marina. It would be nice to have additional facilities such as a better boat loading ramp,

(wider and a less crowded entrance to the lake!!!) and possibly a larger store and mechanical

service area, and a deli shop or restaurant.”).

16

Notably, some of these same property owners were cited by the Corps for violating the

Corps’ rules regarding the clearing of vegetation. See, e.g., Tr. 1277-78 (Morris) (noting that

one of the property owners was cited more than once by the Corps for violating the rules

regarding mowing near the lake); see also id. at 1732 (Park) (noting that another property owner

-22-

preservation of the natural state of the lake; the ability of those with property adjacent to the

marina to quietly and privately enjoy the use of their property and their view of the lake; and the

overall diminishment of the quiet, residential character of Eden Isle. PX 30; PX 32-A at 4-5; DX

384; DX 385; DX 388; DX 389; DX 391; DX 392; DX 393; DX 395; DX 398; DX 401; DX 406.

But see Tr. 1238 (Morris) (noting that decreased property values were not the Corps’ concern).

One of the letters was written by Mr. Upton, who contended that any further development of the

marina defied what he understood to be the marina’s original purpose:

The marina, as originally designed by the Thomas Family, was for the use of

Eden Isle property owners and guests of the Inn. The north and south lines on the

lease were extended past the current facility by Mr. Thomas to ensure there would

be no encroachment by private docks. There was never an intention to extend

north or south, as each side has private residences . . . .

....

. . . This is a resort marina that was built for Eden Isle, and now has the

potential of becoming a hostile element to the very environment that it was put

there to support.

PX 30. But see Tr. 925 (Morris) (indicating that Mr. Upton’s erroneous assertion that the marina

was intended for the use of Eden Isle property owners and the guests of the Red Apple Inn was

contrary to Corps policy). All of the letters authored by the residents of Eden Isle expressed the

sentiment that Eden Isle “was created to approximate an eden in the middle of Arkansas,” PX

45-A at 17, and that they considered Eden Isle to be “their own little paradise,” Tr. 1854-56

(Cabe); accord id. at 826-27 (Morris). Significantly, the trial record contains no evidence that

the property owners substantiated their concerns to the Corps with proof; in other words, they did

not present any evidence to establish that (1) the county road providing access to the marina

could not handle the increased traffic; (2) the marina did not have sufficient parking; (3) there

would be detrimental environmental effects; or (4) property values would decrease. Although

the Corps paid lip service to the need to ascertain the accuracy of the public’s concerns, id. at

1238 (Morris), the trial record is bereft of any evidence that it did so in this case. Rather, the

Corps ignored the fact that that there was no evidence supporting the property owners’ concerns

in considering plaintiff’s development request.

The Corps was not the only recipient of letters in opposition to plaintiff’s development

plan. There was also a letter sent by Mr. Ward to “several legislators” expressing the EIPOA’s

opposition to plaintiff’s development plan and seeking their assistance in defeating the plan. PX

received a citation for violating the Shoreline Management Plan on public property adjacent to

the owner’s residence), 3755-58 (Overton) (noting that there were many violations of Corps

regulations by property owners with land adjacent to the northern portion of Eden Isle Marina’s

lease area); PX 171 at 178-84 (containing photographs taken in January 2006 depicting the

clearing of vegetation by adjacent property owners).

-23-

32-A at 2-3; accord PX 34 (indicating that the relevant members of Arkansas’s congressional

delegation–senators Dale Bumpers and David Pryor, and congresswoman Blanche Lincoln–

received correspondence from Eden Isle property owners). And, Mr. Fowler–the individual

described by Mr. Berry as a prominent Eden Isle resident–was keeping Mr. Berry apprised of the

situation; on April 22, 1996, he sent Mr. Berry copies of two of the Eden Isle property owner

letters, Mr. Ward’s letter to the legislators, plaintiff’s ten-year development plan, and an article

from a weekly business-oriented newspaper about the development plan. PX 32-A.

2. The April 18, 1996, and May 15, 1996 Meetings

In an effort to engage the Eden Isle residents about plaintiff’s plan to develop Eden Isle

Marina, Mr. Walters agreed to host a meeting at the Red Apple Inn on April 18, 1996. PX 31.

Prior to the meeting, Corps employees from the district and project offices, including Mr. Ragar,

Ms. Best, Mr. Roark, and Mr. Johnson, visited the marina to familiarize themselves with the

lease area and the locations of the proposed development.17 PX 32. Mr. Ragar observed that

there were homes on the property adjacent to the northern portion of the lease area, very close to

the edge of the Corps’ flowage easement, and that the southern portion of the lease area was

heavily wooded with no houses. Id.

After touring the marina, the Corps employees traveled to the Red Apple Inn for the

meeting. Id. When they arrived, over 100 people were already in attendance, and one of the

residents was gathering signatures in opposition to the placement of additional docks at the

marina. Id. Among those present were Mr. Upton and the EIPOA’s attorney, Mr. Beebe. Id.

After Mr. Walters presented plaintiff’s development plan, the Eden Isle residents, some of whom

were hostile to Mr. Walters, began to ask questions. Id. Ultimately, Mr. Ragar felt that the

meeting served little purpose because everyone knew about the opposition to plaintiff’s

development plan. Id. However, the Corps employees were able to explain to the Eden Isle

residents that plaintiff was seeking to expand the marina within the existing lease area, and was

not seeking an expansion of the lease area itself. Id. They also explained that plaintiff had the

right to develop within its lease area. Tr. 4786 (Walters). Plaintiff’s contractual rights

notwithstanding, Mr. Ragar recommended, in a memorandum he prepared memorializing the

marina visit and meeting, that plaintiff and the Corps try to work out a compromise with the

EIPOA. PX 32. If such a compromise was not possible, Mr. Ragar suggested that the Corps

require plaintiff to develop the southern portion of the lease area before developing to the north.

Id. Mr. Cabe, who had not attended the meeting, concurred with Mr. Ragar’s assessment. Id.

17

Mr. Garner did not attend the meeting. PX 32. He subsequently retired from the

Corps in May 1996. Tr. 809-10, 829 (Morris). However, according to Colonel Morris, Mr.

Garner continued to assist the EIPOA after his retirement. Id. at 940 (Morris); accord PX 38

(noting that prior to June 18, 1996, the EIPOA had received a response to its mailings from Mr.

Garner); PX 42 (noting Mr. Garner’s presence at a July 2, 1996 EIPOA board meeting, along

with his advice to the board).

-24-

Twelve days after the meeting, Mr. Cabe forwarded to Mr. Beebe a copy of the 1995

lease, the evaluation criteria for new facilities,18 and information regarding permit requests. PX

33. Then, on May 15, 1996, a meeting was held at the Red Apple Inn to further discuss

plaintiff’s development options. DX 55. Attending the meeting were Corps employees,

including Mr. Cabe, Mr. Ragar, Ms. Best, and Mr. Roark; plaintiff’s representatives, including

Mr. Walters; and members of the EIPOA, including Mr. Ward and Mr. Upton. Id. Each group

staked out its position: Mr. Ragar indicated that the Corps was considering restricting

development in the northern portion of the lease area; Mr. Walters asserted that development in

the north was the most economical; and the property owners contended that the road to the

marina would not support any development. Id. Mr. Cabe explained to the property owners that

plaintiff was entitled to develop additional facilities within the lease area because plaintiff had a

valid lease, there was no limit on the number of boat slips at the marina, and a development

request could not be denied arbitrarily. Id. Mr. Ward responded that the marina was already

large enough. Id. Indeed, the property owners attending the meeting believed it was time for the

Corps to make a decision, and expressed their belief that the issue ultimately would be resolved

in court. Id.

Ultimately, the Corps advised plaintiff that they would need to work together to address

the property owners’ protests and reach a resolution, because without such a resolution, the

Corps would not permit any further development at the marina. Am. Compl. ¶ 46; Tr. 245-46

(Ragar).

3. Arkansas’s Congressional Delegation Becomes Involved

In the meantime, on May 10, 1996, Senator Bumpers, Senator Pryor, and Representative

Lincoln sent a letter to Colonel Morris indicating that they had received correspondence from

Eden Isle property owners regarding the development of Eden Isle Marina. PX 34; see also Tr.

926 (Morris) (noting that it was unusual to receive a letter signed by multiple members of a

congressional delegation). They requested that the Corps give close attention to the

environmental and public safety concerns raised by the property owners, and suggested that the

Corps hold a public meeting with a period for public comment. PX 34. The letter served to

focus Colonel Morris’s attention on the ongoing dispute, Tr. 798-99 (Morris), and his first action

upon receiving the letter was to consult with his chief counsel concerning the need to hold a

public meeting, id. at 927-28 (Morris).

Colonel Morris and Mr. Cabe met with staff from the offices of Senator Bumpers and

Senator Pryor on June 3, 1996. PX 36-A; PX 47. The trial record does not contain any

contemporaneous notes from Colonel Morris or Mr. Cabe memorializing the meeting;19 rather,

18

These evaluation criteria were not made part of the trial record.

19

Pursuant to Corps policy, the meeting should have been memorialized in writing for

the Corps’ files. Tr. 1541-42 (Cabe). However, if such a document was created, it was not

provided to plaintiff during discovery. Id. at 1541 (statement of plaintiff’s counsel).

-25-

the meeting was mentioned in a June 5, 1996 memorandum prepared by someone outside of the

Corps, PX 36-A, and a July 26, 1996 letter from Colonel Morris to Senator Bumpers, PX 47.

According to the latter document, during the meeting, Colonel Morris advised the senator’s staff

that the Corps had come up with a “development concept” for the marina that provided for

development to the south of the northern-most berm in the lease area, but no development to the

north of that berm. Id.; see also id. (“The entire lease area is available for commercial

concession purposes, to be developed as needs warrant, and developed in a manner meeting our

approval.”).

4. The Corps’ Rejection of Plaintiff’s Long-Term Development Plan

Also on June 3, 1996, in line with the information provided to the senators’ staff, Mr.

Cabe sent a letter to Mr. Walters rejecting plaintiff’s long-term plan to develop Eden Isle Marina.

PX 36. Mr. Cabe wrote:

We have reviewed your master plan and cannot approve it as submitted.

The part of the lease south of the existing docks must be fully developed before

we would consider developing any part north of the dike. Also, dredging will not

be allowed and you will only be allowed to develop parking as additional docks

are approved.

The Corps has serious reservations about developing the part of the lease

north of the dikes and will never approve parking in such close proximity to the

existing homes. We feel we should delete the area and find a more suitable site to

compensate you for the loss of potential development. If an acceptable

alternat[ive] cannot be found, you should be aware that we intend to delete the

part of the lease north of the dikes upon expiration of the lease, December 31,

2012.20

Id. (footnote added). This letter raises two issues for the first time: (1) deleting the northern

portion of the lease area from the lease and (2) locating an alternative site to compensate plaintiff

for its inability to fully develop the existing lease area. Upon receiving the letter and reading the

Corps’ proposal to delete part of the lease area and locate a replacement site, Mr. Walters

thought Mr. Cabe had “lost his mind” because there was no better site for a marina than Eden

Isle. Tr. 4789 (Walters).

20

Mr. Cabe asserted at trial that plaintiff’s long-term development plan was rejected

because it was not the requested five-year development plan. See Tr. 1533 (Cabe) (“Mr. Walters

was not in compliance with our request, and that’s the primary reason that the ten-year

development plan was rejected, and we asked again, I’m sure, for a five-year development

plan.”) However, the text of the rejection letter does not support Mr. Cabe’s testimony; there is

no indication that the plan was rejected for being a ten-year plan rather than a five-year plan.

Thus, the court does not find Mr. Cabe to be credible on this point.

-26-

The contents of this rejection letter were shared with Mr. Berry. Included in the files

from Mr. Berry’s campaign were typewritten notes of a June 5, 1996 telephone conversation

with Mr. Cabe that contained a summary of the letter’s contents.21 Id. at 675-76 (Berry); PX 36-

A. The notes also reflect that Mr. Cabe explained that access to the marina was via a county

road, making the marina a public marina. PX 36-A.

5. The Corps’ Efforts to Keep the Congressional Delegation Informed

Subsequently, on June 17, 1996, Colonel Morris responded to the legislators’ May 10,

1996 letter, apprising them of the history of Greers Ferry Lake, the history of Eden Isle Marina,

plaintiff’s operation of the marina, and the status of the dispute regarding plaintiff’s development

plan. PX 35. With respect to the latter two topics, Colonel Morris wrote:

On June 3, 1996, we informed our lessee that his ten-year development

plan was not approved . . . . A copy of the letter to our lessee is . . . enclosed.

The present lessee has done an excellent job since he purchased the marina

for $1,500,000 in June of 1995. Prior to the purchase, the marina had suffered

financial hardship and at one time the Corps was forced to turn off the electricity

because of hazardous conditions. Because of the large number of sailboats, the

marina returns a smaller rate of income than some of our other marinas. We feel

that the marina needs to grow in an orderly fashion and meet the growing demand

to be successful and provide the quality of service our customers demand.

Members of my staff have met twice with the property owners, and have

significantly limited our lessee[’]s use of the area. . . . I do not feel that a public

meeting is necessary at this time because no developments that require expansion

of the existing lease area or Federal Permits have been requested by the lessee.

The Corps is continuing to encourage our lessee and the property owners

association to work closely to develop mutually acceptable plans.

Id.; see also Tr. 1676 (Park) (remarking that Mr. Walters was an excellent marina operator),

1708 (Park) (asserting that Mr. Walters ran a “really nice” marina), 4759-60 (Walters) (noting

that the Corps nominated the marina for a national safety award, which it won). This letter and

its attachments were widely disseminated. Colonel Morris forwarded copies to the Southwestern

Division and Corps headquarters, PX 35, a standard practice when handling congressional

21

There is nothing in the typewritten notes indicating who had the conversation with Mr.

Cabe–whether it was Mr. Berry or one of his campaign staff–and there is no evidence in the trial

record containing Mr. Cabe’s notes, if any, from the conversation. Nevertheless, because the

notes were produced from Mr. Berry’s campaign file, the court finds that Mr. Berry either had

the conversation with Mr. Cabe or, if not a party to the conversation, had knowledge of the

conversation at or near the time it occurred.

-27-

inquiries, Tr. 933 (Morris). And, upon receiving the letter from Colonel Morris, Senator

Bumpers forwarded a copy to Mr. Ward. PX 45-A at 3.

6. The Eden Isle Property Owners Continue to Assert Their Opposition and Seek the

Support of Their Congressional Delegation and Mr. Berry

In fact, Mr. Ward and the members of the EIPOA remained very engaged in the

discussions concerning plaintiff’s plan to develop Eden Isle Marina. During a June 18, 1996

meeting, the EIPOA board approved mailing to the Eden Isle property owners an update on the

board’s actions and a copy of the EIPOA’s position paper regarding development of the marina.

PX 38; see also PX 45-A at 14-17 (containing the EIPOA’s May 1996 position paper, which

reiterated the concerns raised by the property owners in their April 1996 letters to Colonel

Morris). In addition, Mr. Ward recommended that an “inventory” of the marina be conducted so

that the board could “catch any activity that is not in agreement with what” the board had been

told about plaintiff’s ability to develop the marina. PX 38.

At the end of June 1996, Mr. Ward received letters from Mr. Cabe and from the EIPOA’s

attorney, Mr. Beebe. In his letter to Mr. Ward, Mr. Cabe summarized the contents of the letter

he sent to Mr. Walters on June 3, 1996, rejecting plaintiff’s long-term development plan. PX 45-

A at 2. Mr. Cabe also forwarded a copy of his letter to Mr. Upton. Id. Mr. Beebe’s letter, in

turn, advised Mr. Ward and the EIPOA to treat the Corps’ rejection of plaintiff’s development

plan as a fait accompli–as if it settled the matter entirely–when corresponding with Arkansas’s

senators, Mr. Berry, and the Corps. PX 39. Mr. Beebe emphasized that the EIPOA should not

“let on” that it intended to continue “to monitor and assess the situation” and that it remained

“concerned about future expansion.” Id.

The EIPOA board held another meeting on July 2, 1996, which was attended by Mr.

Garner and Mr. Upton. PX 42. Mr. Garner advised the board that based on the correspondence

received by Mr. Ward, it appeared that the pace of development at the marina would be slow,

and that the board might benefit more from face-to-face meetings with politicians than from

written correspondence. Id. Further, the board recommended, among other things, investigating

the amount of sewage that would be generated from new houseboats and investigating whether

parking on both sides of the road would create a fire hazard.22 Id.

That same day, Mr. Upton sent Colonel Morris a lengthy letter, typed in all capital letters,

in response to Colonel Morris’s June 17, 1996 letter to Senator Pryor. PX 40. Mr. Upton

repeatedly expressed his opposition to any development at the marina; objected to not being

apprised when the Corps approved the addition of docks in the southern portion of the lease area,

an area where he owned property; and suggested more than once that the amount plaintiff paid to

purchase the marina should not have any bearing on whether development should be allowed.

Id. In addition, he made two requests:

22

The results of these investigations, if they occurred, are not part of the trial record.

-28-

I respectfully request at this time, that no expansion be allowed until

Senator Pryor, Senator Bumpers and Congressman Lincoln at least are shown the

plans and the impact on the shoreline. . . .

....

. . . I respectfully request, on behalf of myself as an affected property

owner, and the other Eden Isle property owners, a plan that shows what you are

granting and the maximum allowable slips for the entire plan up through the year

2012, where the immediate docks will be located, what will be the path of ingress

and egress and what will happen to the existing shoreline and trees. Additional

information as to fire and ambulance access, and disposition of additional sewage,

would be appreciated. I would hope that you might also copy all interested

parties, rather than just stating that the plan has been approved and no meetings

are necessary.23

Id. (footnoted added). Upon his receipt of this letter, Colonel Morris questioned whether Mr.

Upton understood what development the Corps had approved at the marina. PX 43. In the

Corps’ response to Mr. Upton, Colonel Morris explained that the entire lease area was available

for the purposes of operating the marina, to be developed, with the Corps’ approval, as needs

warranted; as well as the development concept discussed in his meeting with members of the

senators’ staffs. Id.

Mr. Upton sent similar, if not identical, letters to other individuals. One recipient was

Senator Bumpers. PX 46. In a July 17, 1996 letter, Senator Bumpers requested that Colonel

Morris provide his comments on the contents of the letter. Id. Colonel Morris responded on July

26, 1996, with essentially the same letter he had previously sent to Mr. Upton. PX 47.

Another recipient was Mr. Berry. PX 44. Mr. Berry responded to Mr. Upton, in a July 8,

1996 letter on campaign letterhead, that at that time, he would not take any action, but that Mr.

Upton should contact him if there was anything he could do. Id. Then, Mr. Berry handwrote the

following note at the bottom of the letter: “Call me if you want me to move on it.” Id.

Four days later, Mr. Ward sent Mr. Berry a letter updating him on the marina dispute.24

PX 45-A. He expressed concern that the possibility existed that the Eden Isle property owners

would see “further development of unspecified magnitude” at the marina. Id. He therefore

wrote: “We realize that you are extremely busy, but felt that you would want to know of our

concerns. Any assistance you can provide in insuring [sic] that further development is curtailed

23

For readability, the court amended this excerpt from Mr. Upton’s letter to reflect

normal capitalization.

24

The letter does not indicate whether Mr. Upton shared Mr. Berry’s July 8, 1996 letter

with Mr. Ward, but the timing of Mr. Ward’s letter suggests that he had seen Mr. Berry’s letter.

-29-

will be greatly appreciated by our Property Owners.” Id. At no time did Mr. Berry seek to

confirm with the Corps or with plaintiff any of the information that was provided to him by Mr.

Ward, Mr. Upton, or any other Eden Isle property owner. Tr. 699 (Berry); accord id. at 661

(Berry) (agreeing that he did not contact Mr. Walters or any of the other marina operators on

Greers Ferry Lake about the dispute while he was a candidate).

At its July 22, 1996 meeting, the EIPOA board discussed Mr. Berry’s handwritten

notation; Mr. Upton, who was not at the meeting, recommended that the board ask Mr. Berry to

“move on it” and suggested that the board ask Mr. Fowler to make the request. PX 48. In

accord with that recommendation, Mr. Ward later that day handwrote a letter to Mr. Fowler

explaining the board’s strong belief that there should be no further development at the marina

and making the following request: “Any help you can provide through Marion Berry and/or

Warren Dupwe will be greatly appreciated.”25 PX 49 at 2-3. Three days later, Mr. Fowler

transmitted Mr. Ward’s letter to Mr. Berry via facsimile, asking: “What do you think we should

do next?” Id. at 1.

7. The Assistant Secretary, Martin Lancaster, Becomes Involved

In addition to enlisting the assistance of the current and likely future members of its

congressional delegation, the EIPOA board sought the assistance of the civilian head of the

Corps’ civil works program, Assistant Secretary Martin Lancaster.

Mr. Lancaster had been appointed as the Assistant Secretary by President Clinton in

January 1996. PX 230. He first met President Clinton when they and their families participated

in Renaissance Weekends in Hilton Head, North Carolina, in the early 1980s; President Clinton

was the governor of Arkansas at that time. Tr. 844 (Lancaster).

In 1986, Mr. Lancaster was elected to the House to represent the third district of North

Carolina. Id. at 841 (Lancaster). His service in Congress coincided with Mr. Berry’s service as

a special assistant to the President; the two eventually met, either through their overlapping

substantive responsibilities (Mr. Lancaster served on the House Agriculture Committee and Mr.

Berry’s position related to agricultural trade) or through mutual friends. Id. at 653-54 (Berry),

841-42 (Lancaster). Mr. Lancaster and Mr. Berry occasionally met for lunch socially, and after

Mr. Lancaster left Congress, they continued to communicate on a similar, infrequent basis. Id. at

842-43 (Lancaster). They remain friends to this day. Id. at 654 (Berry).

Mr. Lancaster lost his bid for reelection to Congress in 1994. Id. at 841 (Lancaster).

After his term expired, President Clinton appointed him to serve as a special advisor on issues

related to chemical weapons, a position in which he served for six or seven months. Id. at 845

25

The court takes judicial notice pursuant to FRE 201(b)(2) that Mr. Dupwe was Mr.

Berry’s opponent in the 1996 general election. See Freshmen of the 105th Congress,

AllPolitics/Congressional Quarterly, http://www.cnn.com/ALLPOLITICS/1996/states/frosh/

9612/01/ (last visited July 15, 2013).

-30-

(Lancaster). Then, with a strong recommendation from Mr. Berry, who was still serving as a

special assistant to the President, President Clinton nominated Mr. Lancaster to become the

Assistant Secretary. Id. at 654-55 (Berry). In fact, once the President decided to nominate Mr.

Lancaster, it was Mr. Berry who informed Mr. Lancaster about the nomination. Id. at 656

(Berry).

Given all of Mr. Lancaster’s connections to Arkansas politicians, it is unsurprising that

the EIPOA would seek him as an ally. In pursuit of that goal, Mr. Ward sent letters to Mr.

Lancaster and Mr. Lancaster’s principal deputy on May 23, 1996, requesting their assistance in

preventing the development of Eden Isle Marina. PX 45. Mr. Lancaster, in turn, sent Mr. Ward

a letter shortly thereafter.26 PX 38. Then, on July 9, 2013, Mr. Lancaster sent another letter to

Mr. Ward to advise him that had been informed that there would be no development in the

northern portion of the lease area. PX 45.

D. The Corps Concludes That There Were Docks Outside of the Marina’s Lease Area

Later that month, on or before July 31, 1996, the Corps held a meeting with Mr. Walters

to discuss its denial of plaintiff’s request to develop the northern portion of Eden Isle Marina’s

lease area. DX 71. Attending the meeting on the Corps’ behalf were Mr. Cabe, Mr. Ragar, Ms.

Best, and Mr. Roark. Id. At the beginning of the meeting, Mr. Walters asserted that he had been

treated unfairly because the Corps was considering the opinions of the Eden Isle property owners

even though they provided no evidence that plaintiff’s development plan would harm them or the

environment. Id. In addition, he reiterated his claim that developing the northern portion of the

lease area would be more cost effective for plaintiff. Id. Mr. Walters suggested that the Corps

stand up to the Eden Isle property owners and allow plaintiff to pursue its development plan. Id.

Mr. Cabe rejected this course of action, stating that the Corps would never approve development

of the northern portion of the lease area and that the Corps would never approve dredging at any

marina.27 Id.

26

Although the letter is part of the trial record, see PX 36-B, it was only admitted for the

purpose of demonstrating that it was received by Mr. Berry’s campaign and was produced from

Mr. Berry’s files, see Tr. 680-82 (exchange between trial counsel and the court). Nevertheless,

for the sake of clarity, the court notes that Mr. Lancaster’s letter was dated June 12, 1996, and in

the letter, Mr. Lancaster indicated that he was responding to Mr. Ward’s earlier, April 9, 1996,

letter. PX 36-B.

27

Mr. Cabe’s statement that the Corps would never approve dredging at any marina is

contradicted by other evidence in the trial record. See, e.g., PX 190 at 96 (containing a May 23,

1988 letter from the acting chief of the Real Estate Division to Heber Springs Marina indicating

that the Corps would consider a proposal to dredge at the north end of the marina’s lease area);

PX 355 (containing an August 15, 1992 letter and an Application for Department of the Army

Permit from Sugar Loaf Marina requesting permission to dredge to fix the erosion of the original

rip rap due to high water and winter storms; the permit was granted, see Tr. 3986-87 (Overton));

PX 355-A (containing a January 4, 1993 memorandum from Mr. Roark indicating that the Corps

had advised Sugar Loaf Marina that its requested dredging, which was “minor in scope, . . .

-31-

Then, Mr. Ragar advised Mr. Walters that several of the existing docks extended beyond

the boundary of the lease area and that the Real Estate Division would take measures to remedy

the situation “possibly by adding additional water area to the lease.”28 Id. Mr. Ragar had

concluded that there were docks outside of the lease area while trying to find a resolution to the

marina dispute. Tr. 184 (Ragar). At some point during the process, Mr. Ragar compared a map

of the lease area with aerial photographs of the marina,29 and discovered that some of the docks

that existed when plaintiff purchased the marina extended out in the water beyond the lease

area’s eastern boundary as generally depicted in Figure 1. Id.

Prior to this meeting, Mr. Walters had no reason to believe that any of the docks at the

marina extended beyond the lease area’s boundary. Id. at 241-42 (Ragar). All of the docks at

issue had been previously approved by the Corps before plaintiff purchased the marina. Id. at

184-85, 214 (Ragar), 1703 (Park). No one from the Corps had advised Mr. Walters prior to the

purchase that there were issues with the placement of any of the marina’s docks. Id. at 185, 241-

42 (Ragar). And, up until this meeting, there had been no indication that the Corps had an issue

with the docks. Id. at 213 (Ragar); accord id. at 2622 (Holden) (noting that the Corps collected

rent from plaintiff based on the docks at issue). Thus, it was the Corps’ position that even

though the protruding docks constituted a violation of the lease, id. at 189-90 (Ragar), 1740,

1818 (Park), Mr. Walters was not at fault, id. at 214 (Ragar), 1755 (Park). But see id. at 2364

(Holden) (asserting that if the Corps approved the placement of docks outside of the lease area,

then it acquiesced to having docks outside of the lease area). Indeed, at the July 1996 meeting

where the issue was first raised with Mr. Walters, Mr. Ragar implied that the Real Estate

Division would take care of it without any negative consequences for plaintiff, DX 71; Tr. 4802

(Walters), and the Corps did not demand that plaintiff move the docks into the lease area or

otherwise remedy the purported problem, Tr. 213-14 (Ragar), 1741 (Park). Thus, Mr. Walters

was not concerned about Mr. Ragar’s pronouncement. Id. at 4799, 4801 (Walters).

Dr. Overton agreed with Mr. Walters that there was no reason to be concerned about the

docks protruding beyond the boundary of the lease area. He explained that from the creation of

would also be covered under [a] nationwide permit with no public comment period.”). But see

Tr. 3666 (Murdock-McDaniel) (noting that, in general, the Corps does not allow dredging on

Greers Ferry Lake).

28

Mr. Cabe, in a Memorandum for Record prepared in April 1999, almost three years

later, asserted that Mr. Ragar “only voiced his concern” and merely had a “suspicion” that the

docks extended beyond the lease area boundary. PX 109-A. These assertions are belied by the

contemporaneous documentation of the July 1996 meeting. See DX 71.

29

It is unclear what map Mr. Ragar examined. As noted above, the map of the marina’s

lease area included in the 1995 lease contained a darkly shaded lease area. See PX 21 at 86; DX

17 at 3; DX 325 at 86. Thus, it would have been difficult for him to ascertain the location of the

berms to which the docks were attached.

-32-

the lake through 1995, when plaintiff purchased the marina, the eastern, water boundary of the

lease area was drawn so as to include “the land area onto which the docks would be anchored,”

and not the water area into which the docks would extend. Id. at 3778 (Overton); accord id. at

3779, 3787, 4317 (Overton); PX 21 at 3 (describing the area encompassed by the 1970 lease as

lying between the fee acquisition line and the 434-foot contour30); PX 192 at 4 (depicting the

lease areas from 1964 to 1995 and the 491-, 461-, and 434-foot contours). In other words, the

Corps had historically intended to allow docks attached to land within the lease area extend

beyond the lease area’s boundary. Tr. 4310-11, 4319 (Overton); cf. id. at 97 (Cabe) (remarking

that marina operators need to be able to move their docks when the level of the lake decreases so

that the docks are not stranded on dry ground), 3062 (Ross) (noting that a marina would have to

be moved with the fluctuation of the lake levels); DX 89 (addressing the need to move docks

further from the shoreline while the lake was a low level). Indeed, according to Dr. Overton,

there was no need for the Corps to define a water boundary for the marina because there were no

competing public recreation uses for the area adjacent to the marina–such as swimming areas or

campgrounds–as there were with the marinas within Corps parks. Tr. at 3789 (Overton).

Dr. Overton likened the marina to Narrows Marina. Narrows Marina did not have a

defined water boundary in the channel until after docks were placed in the channel. Tr. 3789,

3793, 3795, 3798, 3801-03 (Overton); accord PX 250 at 1 (describing the lease area of Narrows

Marina in 1970 as “[a] parcel of land . . . containing 7.2 acres, more or less, above elevation

461,” which is the lake’s normal elevation); PX 255 at 2 (depicting the lease area of Narrows

Marina as of 1999 as containing no water area in the channel31); PX 256 at 4 (indicating, in a

1999 letter, that the Corps had granted permission for the placement of docks in the channel and

that those docks were located in Narrows Marina’s lease area); PX 263 at 23 (describing the

lease area of Narrows Marina in 2003 as including both the land described in the earlier lease

and an eleven-acre parcel lying below the 461-foot contour, i.e., eleven acres of water). Nor did

it have adjacent competing public recreation uses, because such uses were located in the portion

of Narrows Park that was located on the north side of the bridge spanning the channel connecting

the two parts of Greers Ferry Lake, while Narrows Marina was located to the south of the bridge.

Tr. 3789, 3802, 3805-06 (Overton); accord PX 255 at 2 (depicting Narrows Park and Narrows

Marina). Indeed, Dr. Overton’s comparison of the two marinas is apt; at both marinas, the Corps

approved, and the operator built, docks that were attached to land within the lease area but

extended out into the water beyond the lease area’s boundary. However, unlike with Eden Isle

Marina, there is no evidence in the trial record that the Corps ever advised the operator of

30

The 434-foot contour reflected the lowest elevation to which Greers Ferry Lake could

be drawn down for power generation. Tr. 3771, 3778 (Overton).

31

The lease area description for Narrows Marina was the same in 1999 as it was in 1970.

See generally PX 250. Nevertheless, in the map depicting the lease area in 1999, the lease area

boundary does not always coincide with the 461-foot contour. See PX 255 at 2. Instead, the

map reflects that the lease area includes a small cove, all of which is water area below the 461-

foot contour. Id. That small cove is where the first docks in Narrows Marina were located. See

id.; PX 190 at 68.

-33-

Narrows Marina that the Corps-approved docks built in the channel were outside of the lease

area. In addition, the Corps’ remedy differed. At Narrows Marina, the Corps simply added a

parcel of water to the lease area to cover the previously built docks–precisely what Mr. Ragar

told Mr. Walters that the Corps would do at Eden Isle Marina. But, as described later in this

opinion, the Corps ultimately took a different course of action with plaintiff.

E. Plaintiff’s Addition of Boat Slips to Existing Docks at the Marina

Although the Corps had rejected plaintiff’s long-term development plan for Eden Isle

Marina, it did grant plaintiff permission to add boat stalls to existing docks and to build a new

dock while the EIPOA was organizing its opposition to the marina’s development. Specifically,

on March 11, 1996, Mr. Cabe approved the addition of six boat slips to S dock. DX 42 at 2. On

May 23, 1996, Mr. Cabe approved the addition of twelve boat stalls to P dock. DX 56. On June

3, 1996, Mr. Cabe approved the construction of a new six-stall houseboat dock to the south of the

northernmost berm in the lease area.32 PX 36. And, on August 14, 1996, Mr. Cabe approved the

addition of twelve stalls to N dock. DX 338.

Subsequent to the approval of the extension of N dock, Mr. Walters informed Mr. Cabe

that the extension would be delayed until the spring of 1997 due to the dock manufacturer’s other

commitments. PX 57-A. However, plaintiff was able to get the extension built, and on October

14, 1996, had the extension floated into place at the marina. Id.; Tr. 4800 (Walters). Utility

connections were completed later in the week, and installation was in its final stage on October

24, 1996. PX 57-A; Tr. 4805 (Walters).

From the Corps’ perspective, plaintiff’s construction of the N dock extension at the

marina was a defiant act. According to Colonel Morris, Mr. Cabe had advised him–on some

unspecified date–that personnel from the Little Rock District’s Real Estate Division had reached

an agreement with Mr. Walters to delay the N dock extension until after the election. Tr. 968-70,

972, 981, 1247 (Morris); accord PX 55. Colonel Morris explained that the Corps was concerned

that the development of the marina had become a political issue, and it was determined to remain

neutral. Tr. 801-03, 981 (Morris). But see id. at 882-84 (Lancaster) (opining that an agreement

to delay an activity until after an election would be improper, highly unusual, and highly

irregular33). Whether such an agreement actually existed is questionable. It was not

memorialized in writing. Id. at 973, 985, 987 (Morris). There are no contemporaneous

documents referring to it. See, e.g., PX 57-A (indicating, in an October 1996 Corps

memorandum, that Mr. Walters was delaying the N dock extension due to the dock

32

Plaintiff declined to build the dock at the approved location. PX 51; PX 71; PX 79;

see also DX 71 (indicating that on or before July 31, 1996, Mr. Walters advised the Corps that he

would not build the dock until 1997).

33

As discussed in more detail below, this was the stance taken by Mr. Lancaster during

trial when denying any recollection of having knowledge of the purported agreement. Tr. 882-84

(Lancaster).

-34-

manufacturer’s prior commitments,34 not that the delay was based on political considerations).

And, Mr. Walters denied entering into such an agreement. Tr. 4879 (Walters). Regardless of

whether an agreement actually existed, however, the Corps’ belief that an agreement existed had

serious and devastating consequences for plaintiff, as discussed below.

F. Mr. Lancaster’s Visit to Eden Isle

Around the time that Mr. Walters was meeting with the Corps to voice his concerns about

the Corps’ rejection of plaintiff’s long-term development plan for Eden Isle Marina, Mr.

Lancaster was planning a trip to visit several Corps districts, including the Little Rock District.35

Eden Isle was placed on Mr. Lancaster’s itinerary as part of his visit to the Little Rock District,

PX 52, but there is conflicting evidence regarding how that happened. According to Mr. Berry,

Mr. Lancaster likely asked him what places he should visit if he ever made it to Arkansas and

Mr. Berry gave him some suggestions. Tr. 705-06 (Berry). Mr. Lancaster disputed Mr. Berry’s

recollection; he stated that the district engineer placed the trip to Eden Isle on his itinerary for his

visit to the district, and that he did not know who requested his presence on Eden Isle. Id. at 865

(Lancaster). Colonel Morris, however, denied that Mr. Lancaster’s trip to the district was his

idea; rather, he was informed about the visit by someone from the Southwestern Division. Id. at

944-45 (Morris); accord id. (expressing surprise at Mr. Lancaster’s visit). Indeed, the Eden Isle

property owners knew before Colonel Morris did that Mr. Lancaster would be visiting Eden Isle.

See id. at 945-46 (Morris) (noting that the EIPOA had a better source regarding Mr. Lancaster’s

trip than he did); PX 50 (containing minutes from an August 9, 1996 EIPOA board meeting

indicating that Mr. Lancaster would be in Heber Springs on October 7, 1996).

Neither Mr. Berry’s nor Mr. Lancaster’s version rings true; indeed, the court found both

witnesses lacking in candor throughout much of their testimony at trial. Mr. Berry would have

the court believe that Mr. Lancaster, remembering his friend’s suggestions about where he

should visit if he ever traveled to Arkansas, placed Eden Isle on his itinerary at the exact same

time that Mr. Fowler was asking Mr. Berry for assistance with the marina issue. And Mr.

Lancaster would have the court believe that Colonel Morris placed Eden Isle on his itinerary

while there was an ongoing dispute concerning the marina; it is improbable that a district

engineer would take an Assistant Secretary to a site embroiled in controversy during a courtesy

visit to his district. Instead, based on the totality of the evidence in the trial record, the court

concludes that Mr. Berry, as a result of information provided to him by Mr. Fowler on July 25,

34

The date on this document is October 1, 1996, PX 57-A, but because it describes

events that occurred on October 24, 1996, and events that would occur on October 25, 1996, it is

likely that the document was prepared on October 24, 1996.

35

The approximate date is based on four facts: (1) the trip began on October 6, 1996,

PX 52; (2) Mr. Lancaster gave several speeches during the trip, id.; Tr. 864 (Lancaster); (3) trips

that involved speeches were usually planned more than one month in advance, Tr. 864

(Lancaster); and (4) the EIPOA was advised of Mr. Lancaster’s trip on or before August 9, 1996,

PX 50.

-35-

1996, contacted Mr. Lancaster to request his assistance by lending his influence to help Mr.

Fowler–who was supporting Mr. Berry’s congressional campaign–and the other Eden Isle

property owners. Accord Tr. 456-57 (Ward) (asserting that Mr. Lancaster visited Eden Isle at

Mr. Berry’s behest). The court further concludes that Mr. Lancaster agreed to visit Eden Isle as a

favor to Mr. Berry. Accord id. at 456 (Ward) (noting that the purpose of the visit was for Mr.

Lancaster to see the marina and learn about the proposed development), 755, 758 (Berry) (stating

that the purpose of the visit was to listen to the concerns of the Eden Isle residents about the

marina and obtain an understanding of the marina issue), 769 (Berry) (agreeing that the visit was

for political purposes), 944 (Morris) (noting that it was “[v]ery unusual” for an Assistant

Secretary to be involved in a marina issue on Greers Ferry Lake).

Mr. Lancaster arrived at Eden Isle on October 7, 1996. PX 52. Upon his arrival,

members of the EIPOA gave him and Mr. Berry a tour of the marina.36 Tr. 456 (Ward), 707-08

(Berry); see also PX 56 (reflecting that Mr. Lancaster could not “conceive” that there was

sufficient parking at the marina, implying that he had visited the marina). Although Mr.

Lancaster’s visit to Eden Isle was planned, and the EIPOA was informed of the visit, over two

months earlier, Mr. Walters was neither invited to nor present during the tour. Tr. 707-08

(Berry), 4803 (Walters). Indeed, according to his trial testimony, it never occurred to Mr. Berry

that he should contact Mr. Walters to advise him that he would be visiting Eden Isle in relation to

the marina dispute; nor did it occur to Mr. Berry during the tour itself that he should see if Mr.

Walters was available. Id. at 772 (Berry). Also absent from the tour were any local Corps

employees, who had been given the specific instruction to steer clear of Mr. Lancaster’s

activities on Eden Isle due to their political nature. Id. at 951-53 (Morris); accord id. at 386

(Cabe), 1748-49 (Park).

After touring the marina, Mr. Lancaster attended a fundraiser for Mr. Berry at the Red

Apple Inn, which was attended by Eden Isle property owners.37 Id. at 457 (Ward); 873-76

(Lancaster); Am. Compl. ¶ 53; PX 76 at 1; PX 79. Among those present were Mr. Ward and the

Uptons, Tr. 875-76 (Lancaster), but Mr. Walters was notably absent, see id. at 4731, 4735

(reflecting that Mr. Walters did not meet Mr. Berry or Mr. Lancaster until after plaintiff filed this

36

Mr. Lancaster testified at trial that he had no recollection of a marina tour. Tr. 874

(Lancaster). He stated that his memories of his visit to Eden Isle were based on the trip report

prepared by one of his staff members immediately after the trip’s conclusion. Id. at 873

(Lancaster). The trip report merely mentioned that Mr. Lancaster met with Eden Isle property

owners and attended a “reception.” PX 52. However, both Mr. Ward and Mr. Berry testified

that a tour occurred and that Mr. Lancaster was, in fact, present. Tr. 456 (Ward), 707-08 (Berry).

37

Mr. Lancaster testified at trial that he had no recollection of attending a fundraiser,

only of attending a “function.” Tr. 873-74, 918 (Lancaster). Further, the trip report prepared by

one of his staff members immediately after the trip’s conclusion merely mentioned that Mr.

Lancaster met with Eden Isle property owners and attended a “reception.” PX 52. However,

defendant has admitted that the event attended by Mr. Lancaster was a fundraiser. Am. Answer

¶ 53.

-36-

lawsuit). During the event, Mr. Lancaster told Mr. Ward that there would be no further

expansion of the marina. Id. at 531 (Ward); PX 53. Moreover, it was rumored that during the

fundraiser, someone promised that “there would never be another nail driven . . . at the marina

. . . if Marion Berry were elected.” Tr. 299 (Ragar); accord id. at 804 (Morris) (stating that Mr.

Berry had made the development of the marina a political/campaign issue).

At some point during Mr. Lancaster’s trip to the Little Rock District, Colonel Morris

briefed him on the marina issue. Id. at 972 (Morris); see also id. at 946 (Morris) (noting that he

would have reviewed a fact sheet–PX 51–prior to Mr. Lancaster’s arrival). During the briefing,

Colonel Morris may have shared with Mr. Lancaster that the district had an agreement with Mr.

Walters to delay development at the marina until after the election, but if he did not, the

information was conveyed to Mr. Lancaster by other means. Id. at 972-73 (Morris). After

returning to Washington, DC, Mr. Lancaster notified the Little Rock District that he wanted to

review its guidelines for the required number of parking spaces at marinas and for marina access.

PX 52; PX 54. The court received no evidence at trial regarding the district’s response.38

G. The Cease-and-Desist Order

Not long after Mr. Lancaster’s visit to Eden Isle, one of its residents reported the

construction of the N dock extension at Eden Isle Marina to Mr. Lancaster. PX 55. As a result,

Mr. Lancaster called Colonel Morris on the morning of October 24, 1996,39 to discuss the

construction.40 Id.; Tr. 961, 969, 978 (Morris). During the telephone call, Mr. Lancaster stated

38

Pursuant to Corps policy, there should have been a response, Tr. 959 (Morris), but if a

response was prepared, it was no longer in the Corps’ files when discovery commenced in this

lawsuit, id. at 958-61 (Morris).

39

Pursuant to Corps policy, the telephone call would have generated a lot of activity and

documentation within the Corps because Colonel Morris would have advised his superiors at the

Southwestern Division of a communication from the Assistant Secretary. Tr. 979 (Morris).

However, if any documentation of this activity was created, it was no longer in the Corps’ files

when discovery commenced in this lawsuit. Id.

40

Colonel Morris testified at trial that earlier in the morning of Mr. Lancaster’s

telephone call, he had been informed about the N dock extension and, after conferring with Mr.

Cabe and district counsel, had directed that a written cease-and-desist order be issued to plaintiff

due to plaintiff’s violation of the purported agreement not to proceed with any development at

the marina until after the election. Tr. 970-71, 981-82, 984 (Morris). Colonel Morris’s

testimony is not supported by the trial record, which is bereft of any documentary evidence or

testimony from other witnesses that he had such knowledge or took such action. The accuracy of

Colonel Morris’s testimony on this point, however, is irrelevant to the ultimate outcome of the

case. Regardless of whether Colonel Morris learned about the N dock extension from some

unknown source early in the morning of October 24, 1996, or later in the morning that same day

from Mr. Lancaster, the fact remains that the Corps believed that it had an agreement with Mr.

Walters that there would be no development at the marina until after the election, and as a result

-37-

that it was his understanding that aside from the six-stall houseboat dock, no new boat slips had

been approved at the marina and “nothing was to be done until after the election in November

due to the sensitive nature of the activity.”41 PX 55. Colonel Morris responded that he shared

that understanding, and after the telephone call, he confirmed it with Mr. Cabe and Mr. Ragar.

Id. But see id. at 973, 987 (Morris) (confirming that there were no documents memorializing

such an agreement), 4879 (Walters) (denying the existence of any such agreement); PX 57-A

(indicating, in an October 1996 Corps memorandum, that Mr. Walters was delaying the N dock

extension due to the dock manufacturer’s prior commitments).

Because Mr. Lancaster asked for an update as soon as possible, PX 55; Tr. 979 (Morris),

Colonel Morris called Mr. Park–now the resident engineer at the Greers Ferry Lake Project

Office, Tr. 1583 (Park)–to have him and his staff investigate the situation at the marina, PX 55.

Mr. Roark went to the marina, where Mr. Walters informed him that he had only built what had

been previously approved. Tr. 4805 (Walters). After Mr. Roark visited the marina, two things

happened, but it is unclear which occurred first: (1) Colonel Morris provided an update to Mr.

Lancaster, PX 56; and (2) after consulting with Colonel Morris, Mr. Cabe called Mr. Walters and

directed him to cease all further development at the marina, PX 57-A; Tr. 199 (Ragar), 980

(Morris), 4805 (Walters).

On October 25, 1996, after receiving the update from Colonel Morris, Mr. Lancaster sent

a letter to Colonel Morris expressing his opposition to further development at the marina. PX

56; see also PX 71 (noting that the letter was sent to Colonel Morris via facsimile). The court

reproduces his letter in full:

Thank you for your prompt attention to my request for information and

action on the Eden Isle Marina expansion.

Let me state emphatically my personal opposition to any further expansion

of the Eden Isle Marina. Though you may be correct that Eden Isle Marina has

adequate parking for existing slips, I would question that. There may be available

land which he could clear and level to result in one space for every two boat slips.

However, I cannot conceive of parking spaces currently available for even every

of that understanding, the discovery of the N dock extension on October 24, 1996, triggered the

issuance of a written cease-and-desist order.

41

At trial, Mr. Lancaster testified that he did not remember calling Colonel Morris or

having any knowledge about an agreement with Mr. Walters to delay development at the marina

until after the election; indeed, he stated, such an agreement would be improper, highly unusual,

and highly irregular. Tr. 882-84 (Lancaster). However, Mr. Lancaster’s statement was

memorialized in an electronic-mail message that Colonel Morris sent to Mr. Cabe and Mr. Park

on October 24, 1996, at 10:10 a.m.–the same morning of Mr. Lancaster’s telephone call. PX 55.

In light of the contemporaneous description of the telephone conversation by Colonel Morris,

Mr. Lancaster’s conflicting testimony is not credible.

-38-

four boat slips. I would want to see a diagram of how you would fit the requisite

number of parking spaces on the existing site. If we have to approve of

modification to the site, I would certainly oppose clearing and leveling any

additional space at the site to provide needed parking. We simply cannot allow a

complete denuding and leveling of every acre that he owns just to maximize his

utilization of the site. We have to take into account the aesthetics of the Marina

and interest of the surrounding property owners. To allow such maximization by

a developer would reinforce the old image of the Corps as an organization which

rapes and pillages the environment for the sake of development.

In addition to what I believe is already significantly inadequate parking, I

am even more concerned about the access to this site. The streets are extremely

narrow and winding and pass through residential areas where safety is a major

concern. To allow the maximum development at this site which one might be

able to mathematically compute would create a safety hazard which I strongly

oppose and given the opportunity, will disapprove.42

I am greatly concerned by the bad faith shown by Mr. Walters in applying

for an extension to be built in the spring of 1997 and then having the extension

built off-site and floated into place to avoid opposition being raised in a manner

which would stop his construction on-site. These are not the actions of an

individual interested in working with the Corps and property owners in a positive

and cooperative manner.

PX 56 (footnote added).

There are a number of striking things about Mr. Lancaster’s letter. First and foremost,

Mr. Lancaster “emphatically” expressed his “personal opposition” to any development at the

marina and “strongly oppose[d]” maximum development of the marina. Id. The fact that the

Assistant Secretary would choose to intervene to exert his influence in a local, relatively minor,

dispute when he was charged with overseeing the entirety of the Corps’ civil works program is

remarkable.43 See Tr. 944, 991 (Morris). Mr. Lancaster recognized this fact at trial, when he

42

The district engineer who succeeded Colonel Morris, Colonel Thomas Holden,

testified at trial that at the time Mr. Lancaster sent this letter, the Assistant Secretary was not in

the chain of command above the Corps’ chief of engineers, and therefore any directive contained

in the letter was not truly binding. Tr. 2416-17 (Holden). However, because the Assistant

Secretary was the President’s appointee to oversee the Corps’ civil works program, his letter

constituted the administration’s position on the issue. Id. at 2417.

43

Currently, Eden Isle Marina is one of the nine marinas on Greers Ferry Lake overseen

by the Greers Ferry Lake Project Office. PX 5. The Greers Ferry Lake Project Office is one of

sixteen project offices overseen by the Little Rock District. The Little Rock District is one of

four districts overseen by the Southwestern Division. And, the Southwestern Division is one of

nine divisions–both within the United States and abroad–overseen by the Assistant Secretary.

-39-

contended, contrary to the impression left by his letter, that the Eden Isle Marina dispute was not

a major concern for him, id. at 858, 868 (Lancaster), and that he had no personal interest in the

marina dispute, id. at 886-87 (Lancaster).

Second, at no time prior to pronouncing his personal opposition to development at the

marina did Mr. Lancaster seek out or otherwise obtain the views of the marina’s owner, i.e.,

plaintiff or its principal, Mr. Walters. See id. at 840 (Lancaster) (noting that the first time he met

Mr. Walters was during his deposition for this lawsuit), 4735 (Walters) (same). Mr. Lancaster

did not even read the 1995 lease to acquaint himself with plaintiff’s right to develop. Id. at 859

(Lancaster). Third, Mr. Lancaster rejected the factual information he had been provided from

Colonel Morris concerning the availability of parking at the marina and instead opined to the

contrary that there was inadequate parking. PX 56; see also Tr. 992-93 (Morris) (noting that the

there was no basis for some of the assertions in the letter). Fourth, Mr. Lancaster characterized

the clearing of trees to create more parking as “a complete denuding and leveling of every acre”

Mr. Walters owned,44 something that, as explained at trial by Mr. Cabe, the Little Rock District

would never allow. See Tr. 1849 (Cabe).

Fifth, Mr. Lancaster’s stated concerns mirrored, in large part, the concerns asserted by

Eden Isle property owners. Id. at 993 (Morris), 1850 (Cabe); see also id. at 992 (Morris) (noting

that Mr. Lancaster’s opinion was derived from sources outside of the Corps), 993-94 (Morris)

(remarking that his staff believed that Mr. Lancaster obtained his information from the

individuals attending the fundraiser). Sixth, Mr. Lancaster mischaracterized the approval and

construction of the N dock extension; the Corps’ approval of plaintiff’s request of the extension

was not conditioned on the extension being built in the spring of 1997, DX 338, and there was

nothing unusual about boat slips being built off-site and then floated in place, see Tr. 4806

(Walters) (explaining that docks are always built off-site in a flat location that makes it easy to

construct the dock).

Seventh, the final sentence of Mr. Lancaster’s letter erroneously implies that Mr. Walters

had not been working with the Corps and the Eden Isle property owners, see, e.g., PX 32

(memorializing an April 18, 1996 meeting hosted by Mr. Walters and attended by Corps

employees and Eden Isle property owners); DX 55 (memorializing a May 15, 1996 meeting of

Mr. Walters, Corps employees, and Eden Isle property owners); DX 71 (memorializing a

meeting occurring on or before July 31, 1996, between Mr. Walters and Corps employees), and

The court takes judicial notice of the number of current Corps project, district, and division

offices pursuant to FRE 201(b)(2). See Little Rock District Locations, U.S. Army Corps of

Engineers, http://www.swl.usace.army.mil/Locations/LittleRockDistrictLocations.aspx (last

visited July 19, 2013); Where We Are, U.S. Army Corps of Engineers, http://www.usace.army.

mil/Locations.aspx (last visited July 19, 2013).

44

Despite Mr. Lancaster’s reference to preventing Mr. Walters from engaging in

earthwork activities on “every acre that he owns,” most of the 4.8 acres of land owned by

plaintiff in fee simple is not subject to the Corps’ authority.

-40-

that Mr. Walters had an obligation to work with the Eden Isle property owners in the first place.

Moreover, it is stunning that Mr. Lancaster would accuse Mr. Walters of not being cooperative.

PX 56. The evidence in the trial record demonstrates that Mr. Walters acquiesced to all of the

Corps’ demands, to his detriment. Clearly, it was the Eden Isle property owners who were not

interested in cooperation–their goal was to foreclose all development, with no exceptions. See,

e.g., PX 40 (containing Mr. Upton’s July 2, 1996 objection to any development); PX 49 at 2-3

(containing Mr. Ward’s July 22, 1996 representation that the EIPOA board “believe[d] strongly

that no additional growth should be allowed”); DX 55 (reflecting Mr. Ward’s May 15, 1996

statement that the marina was large enough and that he would not recommend further

expansion).

Last, but certainly not least, the trial record contains no evidence that Mr. Lancaster

consulted any experts or relied on any studies–technical, environmental, or otherwise–in

preparing his letter. Rather, it is apparent that Mr. Lancaster’s factual contentions were based

only on his personal observations from his brief visit to Eden Isle and the opinions of the Eden

Isle property owners.

Altogether, Mr. Lancaster’s involvement in the dispute over the marina’s development

was extensive. He corresponded at least twice with the EIPOA. See PX 38; PX 45. Upon Mr.

Berry’s recommendation, he visited Eden Isle, listened to the property owners’ concerns, and

toured the marina. See PX 52; Tr. 456-57 (Ward), 705-08, 755, 768 (Berry). And, acting on a

communication from an Eden Isle property owner, he called the Corps for an update on the new

boat slips being built at the marina and followed up the telephone call with a letter expressing his

personal opposition to further development at the marina. See PX 55; PX 56. However, despite

the clear evidence describing the extent of his personal involvement, Mr. Lancaster testified at

trial that he could not remember having any conversations with the Eden Isle property owners,

Tr. 888 (Lancaster); he did not do any favors for Mr. Berry,45 id. at 860, 881, 918 (Lancaster); he

could not remember touring the marina, id. at 874 (Lancaster); he could not remember attending

the fundraiser for Mr. Berry at the Red Apple Inn, id. at 873-74, 918 (Lancaster); he could not

remember calling Colonel Morris to discuss the report of new boat slips being built at the

marina, id. at 882-84 (Lancaster); and he could not remember the contents of his October 25,

1996 letter expressing his opposition to further development, id. at 890 (Lancaster). Indeed, he

testified that he had no memory of the marina dispute at all prior to being deposed for this

lawsuit, id. at 857-58, 860, 885, 896 (Lancaster), noting that the dispute was not a major concern

for him, id. at 858 (Lancaster); accord id. at 912 (Lancaster) (“It was just one of many projects

that I visited during my tenure. . . . It was no more important than other issues that I dealt with

on the trips.”). He explained that he would have treated the dispute like any others that came

across his desk: “If there were controversies that rose to the level of the Assistant Secretary’s

office, I became involved by determining as best I could the facts involved and then making an

informed decision based on those facts before me.” Id. at 898 (Lancaster).

45

Mr. Lancaster would have the court believe that he would have visited Eden Isle

merely at the behest of some local property owners, and that he just happened to be visiting Eden

Isle at the same time that Mr. Berry was holding a fundraiser there. The court rejects Mr.

Lancaster’s version of the facts.

-41-

Mr. Lancaster’s attempt to minimize his involvement in the marina dispute defies

credulity. As the evidence elicited at trial clearly demonstrates, Mr. Lancaster’s desire to return

a political favor for a friend running for office, the same friend who strongly recommended to

President Clinton that he be appointed as Assistant Secretary, caused him to throw his support

behind Mr. Berry’s political backers and campaign contributors. This is reflected by his

corresponding with the EIPOA, visiting Eden Isle, seeking updates from the Little Rock District,

and penning a letter expressing his personal opposition to further development at the marina. He

inserted himself with alacrity into a dispute that never would have risen to the level of the

Assistant Secretary but for his friendship with Mr. Berry, with far-reaching consequences. As

Colonel Morris testified, Mr. Lancaster “showed a lot of interest” in the development of the

marina and the interest was of such magnitude that it “could not be ignored.” Id. at 799 (Morris);

accord id. at 801 (Morris) (agreeing that Mr. Lancaster’s involvement had an effect on the

Corps’ actions).

Whether in reaction to Mr. Lancaster’s communications or an independent decision, the

oral directive to Mr. Walters to cease all work at the marina was reduced to writing by the Real

Estate Division, and on October 25, 1996, Mr. Cabe and Mr. Ragar delivered the cease-and-

desist order to Mr. Walters in person. Id. at 200 (Ragar), 1847-48 (Cabe). During trial, Mr.

Walters recalled some of the conversation that occurred between him and Mr. Cabe:46

Mr. Cabe: “Ronnie, I just never seen anything like this in my life, in my . . .

thirty-five [years] . . . , I [have] never seen anything like this. There’s more

political pressure, they’re killing us, we’ve got to do something, . . . we’ve got to

stop you.”

Mr. Walters: “Man, how can you do this? You just got through telling me I

could develop my leasehold, my whole leasehold, and now I ask you about this.”

Mr. Cabe: “Just too much political pressure, we’ve got to do something.”

***

Mr. Cabe: “If you will wait ‘til after the election, Ronnie, you may very well, . . .

depend[ing] on the administration[,] . . . get to do just what you want to do. We

just need to wait until after the election and the heat gets off of this.”

Id. at 4806-07, 4879 (Walters). His recollection is consistent with an affidavit he executed in

December 1997 for the purpose of another lawsuit (discussed in more detail below):

46

The quoted language constitutes Mr. Walters’s recollection of the conversation and

does not reflect the actual words used during the conversation.

-42-

14. On October 25, 1996 the Assistant Secretary of the Army in

Washington, D.C. ordered my development to stop. This fact was told to me by

Mr. Tommy Parks [sic] and Mr. Cabe of the Little Rock Corps office. They each

said this decision did not come from the local office. They had never seen this

type of action before and they were certain I would get an offer to buy me out

soon.

....

20. On October 25, 1996, Mr. Tommy Parks [sic], Resident Engineer and

Mr. Billy Cabe, Chief, Real Estate Division, with the Army Corps of Engineers

told me the decision to stop my development of the Marina did not come from the

local office or from the District Office in Little Rock. They said the decision

came from the Assistant Secretary of the Army in Washington. Mr. Cabe told me

he thought I would get an offer to buy the Marina from Mr. Upton. Mr. Cabe said

the decision to stop me was political. Mr. Parks [sic] and Mr. Cabe said nothing

like this had ever happened before and it was totally out of their hands.

....

27. . . . On October 25, 1996 . . . I was ordered from Washington to

totally stop any further development. No explanation was given except I was told

by Mr. Cabe it was political and that they wouldn’t be surprised if I got an offer to

buy the Marina from Mr. Upton.

DX 363.

The cease-and-desist order provided, in its entirety: “In accordance with our telephone

conversation, October 24, 1996, please cease all new construction and expansion of your docks

until further notice.” PX 57. Both Mr. Cabe and Mr. Walters signed the order. Id. At no time

prior to the issuance of the order did Colonel Morris meet with Mr. Walters; indeed, the two did

not meet until Colonel Morris’s deposition for this lawsuit. Tr. 809 (Morris).

III. November 1996 to February 1999: Plaintiff’s Operation of Eden Isle Marina Under

the Cease-and-Desist Order Until the Memorandum of Understanding

Plaintiff ceased all construction at Eden Isle Marina from the moment the cease-and-

desist order was presented and signed. To ensure plaintiff’s compliance with the order, the

EIPOA continued to monitor activity at the marina. See, e.g., PX 53 (noting a report to the

EIPOA board that there was no new construction at the marina as of December 13, 1996). It did

not detect anything improper, but it remained concerned about plaintiff’s development plans and

expressed this concern to the Corps. See, e.g., id. (indicating that the EIPOA board wanted

written assurances from the Corps that plaintiff was not permitted to develop the marina); PX 58

(reflecting that during a March 5, 1997 telephone conversation with Mr. Park, Mr. Ward

expressed the EIPOA’s continued concerns regarding the development of the marina, suggested

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that the Corps offer plaintiff an alternative site, sought confirmation that the Corps was not

permitting plaintiff to expand, and requested that Mr. Park attend an EIPOA meeting).

The EIPOA had no reason for concern. At all times, plaintiff adhered to the order, and

was acutely aware that any activity at the marina might be perceived as violating its terms. For

example, when plaintiff needed to move some of the marina’s docks further out into the lake in

November 1997 due to low lake levels, Mr. Walters first contacted the Corps to ensure that he

would not be deemed to be in violation of the cease-and-desist order should the residents of Eden

Isle complain to the Corps about his activities. DX 89; Tr. 4883-86 (Walters). Mr. Park

reassured Mr. Walters that he could do whatever was necessary to protect the marina–even

temporarily relocating the docks to the northern portion of the lease area. DX 89. However,

because the Corps remained sensitive to the concerns of the Eden Isle property owners, Mr. Park

decided to issue a press release announcing that due to the low lake level, marinas on Greers

Ferry Lake may need to temporarily move their docks. Id.

Not only did plaintiff abide by the cease-and-desist order, it did not even broach the topic

of developing the marina until January 1998. See DX 91. Instead, plaintiff pursued another

course of action.

A. Plaintiff’s April 1997 Lawsuit Against Mr. Upton

On April 11, 1997, plaintiff, represented by attorneys John Belew and Harvey Bell, filed

suit against Mr. Upton in the Circuit Court of Cleburne County, Arkansas. Jt. Stip. ¶ 28; DX 87.

In its complaint, plaintiff generally alleged that Mr. Upton intentionally and maliciously

interfered with its business expectations and contractual relationship with the Corps in an effort

to force the sale of Eden Isle Marina to Mr. Upton or an entity controlled by Mr. Upton. DX 87.

More specifically, plaintiff alleged:

Subsequent to the Plaintiff’s plan and announced intentions of orderly growth, the

Defendant, through his own conduct, and through his agents, servants, employees,

and persons acting for or in behalf of Defendant, undertook the intentional and

malicious tortious interference with Plaintiff’s economic expectancy. Defendant

stated, “the island itself cannot survive with this kind of invasive

commercialism.” The Defendant, through the utilization of improper political

influence and through a malicious course of conduct, has caused the Army Corps

of Engineers through the Secretary of the Army to order the Plaintiff to cease and

desist any further development of the boat dock and marina although such

improvements had been approved. The Plaintiff has been told by the Army Corps

of Engineers that there will be no further expansion of the boat dock and marina.

Defendant maliciously caused the breach or termination of this contractual

relationship and business expectancy.

Id. ¶ 5.

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Plaintiff sued Mr. Upton, not the Corps, due to Mr. Walters’s belief that Mr. Upton was

responsible for pressuring the Corps to halt all development at the marina. Tr. 4881 (Walters);

accord id. at 4807 (Walters) (indicating that when Mr. Cabe presented the cease-and-desist order

to Mr. Walters on October 25, 1996, he confirmed that Mr. Upton was responsible, but stated he

would deny it in a court of law); DX 363 (containing more detailed allegations against Mr.

Upton). The Corps, Mr. Walters believed, was merely doing the best it could muster when faced

with all of the political pressure brought to bear on the agency. Tr. 4881 (Walters). In fact, Mr.

Walters considered the Corps employees he was dealing with–Mr. Cabe, Mr. Ragar, and Mr.

Park–to be his friends who were looking out for him the best they could. Id. at 4881, 5316, 5372

(Walters). He trusted these individuals and relied on their representations, id. at 5316, 5372

(Walters), leading to his belief that they were working on plaintiff’s behalf and trying to find a

way to make plaintiff whole, id. at 5372 (Walters).

Mr. Walters continued to have faith that the Corps was looking out for plaintiff’s best

interests even after discovery in the Upton lawsuit revealed many of the Corps’ internal

communications from the prior year. Significantly, Mr. Walters agreed that he learned much of

what occurred in 1996 during plaintiff’s lawsuit against Mr. Upton. Id. at 4880, 5371 (Walters).

He obtained this information from: (1) publicly available sources, see, e.g., DX 366 ¶¶ 1, 3

(noting that documents were obtained from the Federal Election Commission and implying that

some documents came from local property records); (2) depositions, see, e.g., Tr. 439 (Ward)

(noting that Mr. Ward was deposed), 5343-44 (Walters) (noting that Mr. Cabe, Mr. Ragar, Mr.

Park, and possibly Mr. Roark were deposed); and (3) the Corps via a Freedom of Information

Act (“FOIA”) request, DX 363 ¶ 28. In a December 4, 1997 affidavit, Mr. Walters indicated his

familiarity with Mr. Upton’s correspondence with the Corps and Mr. Lancaster’s October 25,

1996 letter. DX 363 ¶¶ 11, 18. In a July 15, 1998 affidavit, Mr. Walters indicated that he had

obtained from the Corps a drawing of the development proposed for the marina in 1981 and

1982; documents regarding the marina dated April, May, and July 1996; and a copy of a master

plan depicting proposed covered docks after February 1996. DX 366 ¶¶ 2, 4-5. And, Mr.

Walters testified at trial that the Corps fact sheet presenting a timeline of events from February 2,

1996, through January 4, 1999, was produced during the litigation. Tr. 4901, 4908 (Walters)

(referring to PX 79). The timeline in the fact sheet reflects, among other events, Mr. Lancaster’s

attendance at a reception at Red Apple Inn on October 7, 1996; Colonel Morris’s receipt of Mr.

Lancaster’s October 25, 1996 letter expressing his opposition to development at the marina;

Colonel Holden’s September 24, 1998 meeting with Mr. Berry to ascertain Mr. Berry’s position

on plaintiff’s request; and Mr. Berry’s October 5, 1998 letter expressing his continued opposition

to development. PX 79.

Proceedings in the lawsuit concluded in 1999. Id. at 5338 (Walters). Mr. Upton

prevailed; the state court found that Mr. Upton’s lobbying efforts constituted a protected activity

that could not be the basis for lawsuit. Id. at 4881-82 (Walters).

B. Plaintiff’s February 1998 Meeting With the Corps

While plaintiff’s lawsuit against Mr. Upton was pending, one of plaintiff’s attorneys

wrote a letter to the Corps to request a meeting to discuss the possibility of lifting the cease-and-

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desist order and allowing further development at Eden Isle Marina. DX 91. In the letter, Mr.

Belew indicated that there was a need to expand the marina to accommodate the demand for boat

slips, specifically noting that the marina had a 100-person waiting list. Id.; accord PX 35

(reflecting that Colonel Morris recognized the “growing demand” for boat slips at the marina as

of June 1996); PX 56 (reflecting the Corps’ recognition of the demand for boat slips and the

existence of a waiting list at the marina as of October 1996); Tr. 1751 (Park) (noting that the

marina had a waiting list and that there people who supported plaintiff’s request to expand the

marina), 2324 (Holden) (recognizing the existence of a waiting list at the marina), 4761

(Walters) (noting that there was “unbelievable” demand for boat slips after plaintiff purchased

the marina that could not be met), 4762-63 (Walters) (remarking that plaintiff submitted a ten-

year plan due, in part, to the “astronomical” demand).

The requested meeting occurred on February 10, 1998, at the marina. PX 59; PX 60.

Representing plaintiff at the meeting were Mr. Walters, Mr. Belew, Mr. Bell, and the marina

manager, who was also Mr. Walters’s sister. PX 59; PX 60. Attending the meeting on behalf of

the Corps were Mr. Cabe, Mr. Ragar, Ms. Best, Mr. Park, Mr. Roark, and Mr. Johnson. PX 59;

PX 60. During the meeting, the participants discussed plaintiff’s options for developing the

marina. PX 59; PX 60. One option discussed was the placement of new docks in the southern

portion of the lease area. PX 60. The Corps employees indicated that they would entertain a

request to expand the marina within the existing lease area to meet plaintiff’s immediate need,

but could not guarantee that the request, which would overturn the cease-and-desist order, would

be granted. Id.; PX 59.

Also discussed during the meeting was the possibility of providing plaintiff with an

alternative site for expansion.47 PX 59; PX 60. This was not the first time that the Corps

suggested compensating plaintiff for its inability to fully develop the marina with an alternative

marina site; the possibility was mentioned in Mr. Cabe’s June 3, 1996 letter rejecting plaintiff’s

long-term development plan. See PX 36. However, it was the first time that specific sites–

which are depicted in Figure 2, an excerpt from PX 5–were discussed. One site, Miller’s Point,

was suggested by Mr. Park but rejected by Mr. Walters as a terrible location to build a marina

due to the area’s isolation. PX 59; PX 60; Tr. 4890-92, 4919-20, 5145, 5147 (Walters). Mr.

Walters then suggested an area near the entrance to Eden Isle. PX 59; Tr. 4892, 5145, 5147

(Walters). The Corps rejected this idea, noting that the Eden Isle property owners would object.

Tr. 5145, 5147 (Walters). Mr. Walters then floated the idea of Cove Creek Park, believing that

the existence of Corps facilities, including campgrounds, at that location might provide a

customer base for a marina. Id. at 4919, 5145-47, 5219 (Walters). Mr. Park agreed that the

existence of campgrounds at Cove Creek Park would make the park a good location for a marina,

id. at 5219 (Walters), but no further discussion of alternative sites occurred. After the meeting,

plaintiff began to make plans to develop the southern portion of the lease area. Id. at 5317

(Walters).

47

The evidence in the trial record contains some conflicting information regarding who

initiated this discussion, the particular alternative sites discussed, and who suggested the

particular alternative sites. The court has reviewed the conflicting evidence; what is set forth in

the opinion reflects its resolution of those conflicts.

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Figure 2

C. A New District Engineer for the Little Rock District

1. Tension Between Mr. Berry and Colonel Morris

At the same time that plaintiff was seeking to restart development at Eden Isle Marina,

the Little Rock District was encountering political pressure regarding another lake within its

jurisdiction. The instigator was Mr. Berry, who, having won his election, was the United States

congressman representing the first congressional district of Arkansas. Id. at 640, 713 (Berry).

Sometime after he assumed office, Mr. Berry called Colonel Morris on behalf of one of his

friends–a lobbyist for Tyson Foods, Inc.–who wanted to build a private boat dock on Beaver

Lake despite the moratorium on private docks.48 Id. at 804-05 (Morris). Colonel Morris advised

Mr. Berry that legally, he could not make an exception to the moratorium, and instead suggested

that Mr. Berry’s friend apply for a community dock. Id. at 805 (Morris). Mr. Berry was

48

Beaver Lake is located in northwest Arkansas and was not in Mr. Berry’s

congressional district. Tr. 805 (Morris).

-47-

unhappy with this response. Id. at 806 (Morris). He told Colonel Morris that he would get him

fired, and asked for his superior’s name. Id. However, when Mr. Berry called Colonel Morris’s

superior, Brigadier General Henry Miller, Jr., commander of the Southwestern Division,49 and

demanded that Colonel Morris be fired, Brigadier General Miller declined, advising Mr. Berry

that Colonel Morris correctly rejected his request. Id. at 806-07 (Morris). Indeed, shortly

thereafter, Brigadier General Miller’s superior, the Corps’ Chief of Engineers, told Colonel

Morris that he had heard about his run-in with Mr. Berry and confirmed that he had done the

right thing. Id. at 807 (Morris).

After this incident, Colonel Morris found his working relationship with Mr. Berry to be

“very difficult . . . .” Id. For the next few months, communications with Mr. Berry were

accomplished through Colonel Morris’s civilian deputy, David Burrough, who had known Mr.

Berry for thirty years. Id. However, that relationship soured when Mr. Berry accused Mr.

Burrough of lying to him, which, from Mr. Berry’s perspective, also made Colonel Morris a liar.

Id. at 807-08 (Morris); accord id. at 808 (Morris) (calling the relationship “testy”), 1262 (Morris)

(calling the relationship “strained”); see also id. at 774 (Berry) (“I did have great difference with

Colonel Morris, found him not to be a man of great–of any integrity.”). After Mr. Burrough

retired, the problems subsided. Id. at 808 (Morris). However, Mr. Berry made it known that he

would attend Colonel Morris’s change of command ceremony–typically, a new district engineer

was assigned to the district every three years50–to ensure Colonel Morris actually left the

district.51 Id.

49

Colonel Morris’s superior is only identified in the trial record as General Miller. Tr.

806-07 (Miller). The court takes judicial notice pursuant to FRE 201(b)(2) of Brigadier General

Miller’s full name, rank, and position. See Southwestern Division History, U.S. Army Corps of

Engineers, http://www.swd.usace.army.mil/About/History.aspx (last visited July 24, 2013).

50

Colonel Morris served as the district engineer from July 1995 to July 1998. Jt. Stip.

¶ 18. His successor, Colonel Holden, served from July 1998 to July 2001. Id. ¶ 19.

51

Mr. Berry’s personal disdain for Colonel Morris is further exemplified by his

testimony at trial concerning Colonel Morris’s duties during Mr. Lancaster’s visit to Eden Isle:

Q . . . Colonel Morris couldn’t attend, could he, because it was a fundraiser?

A I suppose. I don’t [know].

Q Okay. Were you aware that Colonel Morris was sitting out in his car

waiting for Secretary Lancaster and couldn’t come in?

A No.

Q Okay, we’ll ask him about that.

A That’s good for colonels.

Q I'm sorry?

A That’s good for colonels.

Q To sit out and wait? Sometimes you’re [sic] taxi drivers?

A Yes.

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The change of command occurred in July 1998. Jt. Stip. ¶ 19. As promised, Mr. Berry

attended the ceremony, Tr. 808-09, 1262 (Morris), 2325-26 (Holden), missing a day of House

proceedings to do so, id. at 809 (Morris).

2. The Arrival of Colonel Holden

During the week prior to the change of command, Colonel Morris briefed Colonel

Holden on the issues in the Little Rock District. Id. at 2328 (Holden). Colonel Morris

mentioned his issues with Mr. Berry. Id. at 2328-29 (Holden). He also advised Colonel Holden

about the Eden Isle Marina situation, noting that he had received a letter from Mr. Lancaster; that

based on the information before him, he had stopped plaintiff’s development of the marina; and

that the issue was something that Colonel Holden would need to address. Id. at 2330-32

(Holden); accord id. at 2413 (Holden). Colonel Morris did not provide many details about the

marina situation, such as the fact that Mr. Lancaster had visited Eden Isle. Id. at 2331-32

(Holden). Colonel Holden learned more about the marina situation after he was formally

installed as district engineer from his staff. See id. at 1873 (Cabe) (noting that each of the

district’s division chiefs briefed Colonel Holden).

D. Plaintiff’s August 12, 1998 Request for New Boat Slips

Not long after Colonel Holden became the district engineer of the Little Rock District,

plaintiff sought permission to bui

This text is long and has been trimmed here. Open the source document for the complete record.