Who would believe that a building owner would be compelled to protest on the public sidewalk outside his own property in a hazmat suit in order to get justice from a tenant—a tenant that contaminated his multi-tenant 12,000-square-foot property and wiped out its value?

The answer lies in a story of contamination and contracts, of banks and courts, and of the building that ultimately slipped from its owner’s control.

The cast of characters:

• A dry-cleaning business owner/ tenant.

• A building owner/lessor.

• A successor dry-cleaning business owner/tenant.

• Chase Bank that financed $400,000 in improvements.

• A county collecting property taxes.

• A buyer whose $1 million offer was accepted, who placed $10,000 in escrow to bind the deal.

• A brother who at one time was a principal in a successful commercial real estate brokerage who co-signed the original 1996 lease with the original dry cleaner.

This chapter is how those pieces collided.

In 1996, the building owner leased 2,400-square-feet of space to a wildly successful multi-entity dry cleaning enterprise with over 30 locations. The newly leased space was an additon to their portfolio. The rent terms were lucrative for the building owner and the operation ran steadily for the next decade.

In April 2006, the dry cleaning business at the building was sold to a new operator, with part of the purchase price paid in cash and the remainder financed through a substantial promissory note carried by the seller.

That same year, the building owner’s mortgage reached maturity. As a condition of renewal, the bank required a phase one and phase two environmental assessment of the property.

Completed in June 2006, the assessment revealed that the soil beneath and surrounding the building was contaminated with PERC, the solvent used in the dry-cleaning process with a known association with cancer. In some locations, PERC was detected as deep as sixteen feet below the ground adjacent and under the building.

Upon receiving the report, the bank eventually invoked a clause in the mortgage agreement providing that if contamination were discovered and could not be fully remediated to pristine, zero-contamination standards, the bank could seize all rental income generated by the property. The bank then notified the tenants that rent payments were to be made directly to the bank.

The building owner was left with a contaminated property and no rental income to maintain it or to pay annual property taxes of approximately $25,000. Under these changed circumstances, the pending sale of the building was rescinded.

The original dry-cleaning business owners claimed that the contamination may have been caused by the new owners to whom they sold the business. That assertion strained credibility. There was no realistic way that the extensive contamination later documented could have accumulated during the brief two-month period between the sale and the environmental assessment that uncovered it.

The former owners would agree to remediate the contamination of the property only to minimum standards required by the State of Michigan, and only if the building owner agreed to waive any right to bring suit against them for the damage, financial and otherwise and the gross negligence involved.

The building owner refused. He was seeking to be made whole. One potential solution being discussed among the parties was for the reckless offender to purchase the building at or near the $1 million price that had been offered and accepted before the contamination was discovered. For a time, matters appeared to be moving in that direction, but the dry-cleaning business owner ultimately reneged.

After the discovery of the contamination, the property’s market value had collapsed—from one million dollars to below $500,000. That is why the lawsuit took on such enormous importance—to win a civil judgment in a court of law against the environmental scofflaw— who easily had the financial means to satisfy a judgment and make the owner whole.

Negotiations stalled and the dispute reached an impasse.

With little cash flow to sustain operations, property taxes went unpaid for years. Ultimately, the county moved to seize the building and sell it at auction to recover the taxes owed.

Enter the hazmat suit.

As the county’s seizure of the building drew near, the owner purchased and donned a $250 bright yellow, full body hazmat suit with a hood and feet and took up his protest in front of the property, warning passersby that the building site was contaminated with PERC, a chemical associated with cancer. He stood near the dry-cleaning business without blocking access, but the implication was clear.

The protest immediately threatened the business’s viability. The current dry cleaner hired a law firm and filed for a temporary restraining order and was granted such from the court. When it was served on the building owner he had to stop at the risk of being in contempt of court and severe penalties.

A few weeks later, the restraining-order hearing was held, and the judge ruled that barring the owner from protesting in front of his own building would violate his First Amendment right to free speech. The order was lifted and the next day the building owner was out front, dressed head-to-toe in the yellow hazmat suit making it look less like a protest than the scene of a chemical disaster.

The protest did more than disrupt the day-to-day operations of the dry-cleaning business—it jeopardized the current owners’ ability to service the note they still owed to the prior owners and of course the prior owners’ ability to collect—the same former owners who refused to fund environmental remediation of the soil beneath and around the building unless the owner agreed to waive the right to bring suit.

The protest brought the parties to the table and the scene moved from the front of the owner’s building to the polluters’ prestigious high powered national law firm in downtown Detroit overlooking the Detroit River with Canada in the distance. The building owner and his wife were huddled in one conference room with their lawyers on the 37th floor of the Detroit Renaissance Center.  Opposing counsel was in another conference room with their client—the polluters. And for eleven straight hours the building owner’s attorneys shuttled back and forth between conference rooms until an agreement was reached at 10:45 p.m. resulting in the drafting of a nine page agreement which included non-disclosure provisions, commonly called an NDA—that the building owner would have to sign in order to get one dime from the people who had desecrated and despoiled his vintage property.

The agreement provided that the polluters would pay the building owner a fraction of what was lost in the value of the property in exchange for his agreement to cease all protest activity, refrain from disclosing the existence of contamination, and waive any right to pursue legal recourse against them. That was the best he could do but better than the alternative — getting nothing.

A $250 purchase of a hazmat suit ultimately led to that settlement. Without it, the owner would have had no practical leverage—no realistic path to recovery other than pursuing a prohibitively expensive environmental lawsuit for which he lacked the resources.

The building’s owner—who would later document these events in Grosse Pointe and Beyond, An Unexpected Life: A Family Chronicle ultimately lost the property to the county. The total loss amounted to $600,000, reflecting a rescinded $1 million sale reduced by outstanding obligations at the time, including loan payoffs, property taxes, and other expenses totaling  $400,000.

One of the hard-earned lessons of this story is this: leasing property to a business associated with toxic substances is a mistake—no matter how attractive the rent or how solid the tenant’s finances may seem at the time. That mistake caused a loss of $600,000 and without the funds that were forthcoming from the sale caused the building owner and his wife to lose multiple properties in Kauai and northern California sending them down a path to financial ruin. In addition some of the lost $1 million sales proceeds were to be shared with his siblings. They lost out too.

Follow up chapters — 

Cronyism & Corruption at Grosse Pointe Park City Hall 

“Sitting on Tens of Millions”, Brotherly Love — The 71 Dollar Send Off at 95 Lakeshore to Fight a Corporate Polluter with Deep Pockets