246 N.C. App. 1
N.C. Ct. App.2016Background
- Beroth Oil's underground storage tanks leaked petroleum in 2005; DENR required a comprehensive site assessment and corrective action plan (CAP). Defendant admitted the release and implemented active remediation on its property.
- Plaintiffs BSK Enterprises and B. Kelley Enterprises bought adjacent commercial property in 2006, later learned groundwater beneath their lot contained a dissolved-phase petroleum plume. No free product or soil contamination was found on plaintiffs’ lot; levels were below Gross Contaminant Levels but above 2L standards for some constituents.
- DENR-approved CAP proposed active remediation on defendant’s property only; DENR expected plaintiffs’ contamination to be abated via natural attenuation from defendant’s cleanup. Defendant’s remedial work reduced contaminant levels under plaintiffs’ property.
- Plaintiffs’ expert proposed active remediation for plaintiffs’ site costing ~$1.13 million; jury found remediation cost $1,492,000 but also found diminution in market value of $108,500 (uncontaminated value $180,000; contaminated $71,500).
- Trial court granted plaintiffs partial summary judgment on nuisance and trespass; after verdict the court reduced recovery to the diminution-in-value ($108,500), concluding restoration costs were disproportionate to the loss in value and no personal-use exception applied. Parties appealed/cross-appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper measure of damages for groundwater contamination | Raymond: award restoration/remediation costs (~$1.49M) so plaintiffs can control cleanup | Diminution-in-value is proper where remediation costs are disproportionate | Where remediation cost is greatly disproportionate and no personal-use reason to restore, measure is diminution in value ($108,500) |
| Standing to sue for groundwater remediation | Plaintiffs: as landowners they have an interest in subsurface waters and can sue under common law and OPHSCA | Beroth: groundwater is public resource; plaintiffs lack standing | Plaintiffs have standing; landowners have right to beneficial use of percolating waters and OPHSCA preserves third-party remedies |
| Duty to mitigate jury instruction (refusal to connect to municipal water) | Plaintiffs: connecting to city water not required and does not constitute cleanup | Defendant: plaintiffs’ refusal to connect shows failure to mitigate and motive to increase award | Trial court properly denied duty-to-mitigate instruction; statutory text excludes connection from constituting cleanup and no evidence supported instruction |
| Whether award reflected stigma or warranted JNOV for lack of substantial interference | Defendant: diminution award is stigma (temporary) and claims fail absent real/substantial interference | Plaintiffs: contamination and remedial intrusion caused nuisance/trespass and diminution | Court: award was for trespass, nuisance and OPHSCA violation (not stigma); testimony showed more than scintilla of interference (monitoring, drilling, inconvenience), so JNOV denied |
Key Cases Cited
- Olivetti Corp. v. Ames Bus. Sys., 319 N.C. 534 (standard of review: measure of damages is question of law)
- Plow v. Bug Man Exterminators, Inc., 57 N.C. App. 159 (two measures for land damages: diminution or cost of restoration)
- Huberth v. Holly, 120 N.C. App. 348 (replacement costs relevant to assessing diminution; jury must consider both when evidence supports)
- Casado v. Melas Corp., 69 N.C. App. 630 (impermanent/continuing injuries may warrant repair costs rather than diminution)
- Phillips v. Chesson, 231 N.C. 566 (diminution rule applied with caution; impermanent injuries justify repair-cost measure)
- Russell v. N.C. Dep’t of Env’t & Nat. Res., 227 N.C. App. 306 (awards must avoid unjust enrichment; proportionality limits restoration awards)
- Jordan v. Foust Oil, 116 N.C. App. 155 (OPHSCA imposes strict liability and does not preempt common-law remedies)
- Hampton v. N.C. Pulp Co., 223 N.C. 535 (riparian/landowner rights to flow and use of water support standing to sue for interference)
- Bayer v. Nello L. Teer Co., 256 N.C. 509 (landowner right to reasonable and beneficial use of waters)
- Rudd v. Electrolux Corp., 982 F. Supp. 355 (stigma damages barred for temporary/abatable nuisances)