After a ten-day trial in U.S. District Court on St. Croix, a jury Thursday found St. Croix Alumina defrauded St. Croix Renaissance Group by hiding environmental problems before the sale of a 1,400-acre south shore property and awarded Renaissance $28.7 million in damages.
At question is the financial responsibility for the environmental impact of the mound of dusty red bauxite tailings from aluminum refining on the site over several decades, under several owners. St. Croix Alumina, owned by aluminum giant Alcoa, sold the property in 2002 to Renaissance, a company formed to develop the site into St. Croix Renaissance Park.
“We disagree with the decision and will appeal,” said Alcoa spokesman Mike Belwood, reached by phone early Friday evening.
In its complaint, Renaissance said St. Croix Alumina signed a warranty requiring it to disclose any environmental or other liabilities, but instead of disclosing, actively covered up releases of red mud and caustic liquid into the sea.
Prior to closing, St. Croix Alumina purportedly told Renaissance there was a single incident related to unusual rainfall when there were “actually multiple releases.” And rather than the product of rainfall, Renaissance said the one disclosed spill was caused when St. Croix Alumina “broke the walls of the dikes containing the liquid in the cells,” letting out piles of highly alkaline liquid which washed large quantities of the red mud off the piles and ultimately into the sea.
Renaissance said St. Croix Alumina received a report finding new seeps of caustic fluids and red mud into the sea on June 11, 2002, and this information was withheld from Renaissance before its purchase of the property on June 14, 2002. Natural Resource Consultants, which the Department of Planning and Natural Resources ordered Alumina to hire to inspect the site, produced that report.
The total award is made up of $12.6 million for breach of warranty and fraud in the “inducement of the purchase;” $6.1 million in punitive damages and another $10 million for negligence, according to the judgment and jury verdict filed with the court.
Belwood would not discuss the specifics of the case, other than to reiterate that Alcoa disagreed with the claims. He said Alcoa’s subsidiary acquired the company in 1995 from the Virgin Islands Alumina Company, ran it as a refinery in ’98 and ‘99, shut down the plant in 2000 and sold the property in 2002.
The new Diageo Captain Morgan distillery is located on the same parcel of land, several hundred yards west of the red mound of tailings.
Public records and numerous news accounts show Harvey Aluminum Corp. began developing the first plant on the site in 1962 and several different companies owned the manufacturing plant over the ensuing 40 years, the last being St. Croix Alumina.