After a frenzied and exhausting four days of back-room negotiations last week, one of Fairfax County's most controversial lawsuits against a developer was settled out of court. The agreement, however, left one major question unanswered: Who's on first?

Confusion erupted as each side claimed victory and some developers complained bitterly about having been left out. In the midst of the furor, county officials angrily discovered that one of their staff attorneys was thinking of joining a law firm on the developers' side. They promptly ordered him out of the county attorney's suite on the 10th floor of the Massey Building.

Out of all the chaos, there was one obvious winner: John T. (Til) Hazel, the developer who settled with the county. Thanks to the agreement, he sat back in his Fairfax City office making plans to resume construction on his 800-acre subdivision in the Occoquan watershed in southwestern Fairfax County.

The dispute before the court was an outgrowth of a July 26, 1982, decision by the Board of Supervisors. The board then adopted its so-called Occoquan downzoning policy, which restricts development to one house per five acres instead of one house per acre.

The board said the policy, which severely limits growth in one-fourth of the county, was needed to protect the Occoquan Reservoir, the drinking water supply for 600,000 Northern Virginians.

Developers contend that is a bogus excuse to restrict growth in the last remaining large, undeveloped area of Fairfax.

Hazel, one of the county's most influential developers, and 28 others who had bought land and laid development plans for the Occoquan sued the county, argued that under Virginia law they have the right to finish their developments and that the new regulations would significantly curb their profits.

Numerous civic and public interest groups, ranging from the Fairfax Federation of Civic Associations to the Environmental Defense Fund, rallied around the county and the new restrictions.

While the other landowners are awaiting the outcome of the court battles, which could drag on for five or six years, Hazel became free to resume work on his expansive Fairfax Station subdivision.

That has angered some of the attorneys representing landowners in the remaining cases. "You don't let the largest guy get away because you're sure he has the most power," attorney Marc E. Bettius said. He said the county did not want to tangle with the powerful Hazel, who is known as a shrewd negotiator.

But Annandale Supervisor Audrey Moore, the leading supporter of the Occoquan policy and a longtime adversary of Hazel, said she only supported the settlement with Hazel because Fairfax Station was "close enough to that line that it was a real question."

County attorneys had reached the conclusion a couple of weeks ago that, if the county was vulnerable, it was on the Fairfax Station case. On July 22, county officials approached Hazel to find out if he would be interested in a settlement, according to sources. Hazel and County Executive J. Hamilton Lambert reportedly discussed the issue over a two-hour lunch, at the end of which, Hazel agreed to try to work something out.

After hours of negotiations during the weekend, Francis A. McDermott, the attorney for Fairfax Station, and county attorneys agreed that in return for the right to finish the subdivision, Fairfax Station Associates--which is partly owned by Hazel and which had been represented in the suit by Hazel's law firm--would have to retract its arguments challenging the constitutionality of the Occoquan policy.

Hazel's development firm did just that on July 25, but not before Hazel's law firm disassociated itself from the settlement. As a result, the settlement was instead signed by Milton V. Peterson, a partner in Fairfax Station Associates.

"Hazel has said repeatedly, 'I don't believe a word in it the concessions , but I'd stipulate that the sky is purple if I can go ahead and develop Fairfax Station,' " McDermott said. "Often times in settlements, the parties make concessions. They can say, 'The sky is falling,' but that doesn't have a thing to do with reality."

Other developers were reportedly upset that one of the strongest cases against the Occoquan controls had been dropped.

McDermott said the developers were faced with the prospect of a $5 million to $7 million project sitting undeveloped during years of litigation.

"The object of the litigation was to be able to continue the development. Now they've got that," he said. "Do we stay in there and beat the county on a point of law or do we build a project today?"

County attorneys hope the Hazel group concessions will give their side more weight, but McDermott thinks they will not affect the other cases because the settlement was signed by the two parties and not imposed by a judge. The first three of the remaining 28 cases are expected to be heard by Circuit Court Judge Johanna L. Fitzpatrick starting Nov. 15.

A minor uproar erupted in the county bureaucracy when County Attorney David T. Stitt discovered that one of his assistants, Roger Cornelier, had discussed job possibilities with Bettius over lunch. Stitt blew up, according to sources, and immediately moved Cornelier to another floor of the county government building.

Cornelier said he was not working on the Occoquan cases and had not discussed the litigation with Bettius. He said he understood Stitt's concerns and did not object to being moved. "I just wish the whole thing would go away," he said.

For Fairfax officials, however, the Occoquan issue promises to remain a major issue for many years to come.