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Houston Unlimited, Inc. Metal Processing v. Mel Acres Ranch
389 S.W.3d 583
Tex. App.
2012
Check Treatment

*1 [defense], establishing vents it a trial be a waste of

such that would

judicial Kellogg resources.” In re Brown Root, (Tex.App.-Hous-

& orig.

ton For proceeding). [1st Dist.] reasons, Wagner

these has Group

failed to that the information is establish only may

“the means obtain [it] Co., See Republic evidence.” Ins. 163. the Wagner

S.W.2d at Because

Group each has established waiver,

three elements offensive-use

two in this privileged documents issue discovery. are not subject

mandamus reasons, foregoing

For the we condition-

ally grant mandamus relief and direct

trial order compelling court vacate its

production of the privileged two docu- are

ments at issue this mandamus. We

confident trial will act in court accor- opinion.

dance with this The writ will

issue if trial court fails to so. do UNLIMITED,

HOUSTON INC. METAL

PROCESSING, Appellant RANCH, Appellee.

MEL ACRES

No. 14-10-01006-CV. Texas, Appeals

Court (14th Dist.).

Houston

Nov. 2012.

Rehearing and En Banc Overruled

Dec. *2 Platts, Smith, Jr., Henry E.

James S. Houston, Wilkin, appel- Ramsey Bruce lant. Gibson, Altsuler, R. A.

George building. Kent Mel Acres retained an environ- Houston, appellee. consultant, Strata, mental Geo whose test- ing of water samples December 2007 *3 SEYMORE, Panel consists of Justices arsenic, chromium, revealed nickel, copper, BOYCE, and MIRABAL.* and zinc exceeding state action levels the culvert copper and exceeding state ac- OPINION tion levels in large pond. SEYMORE, W. CHARLES Justice. In December Mel Acres lodged a Unlimited, Appellant, Houston Inc. Met- complaint -withTexas Commission on Envi- (“HUI”), al Processing appeals judgment ronmental Quality (“TCEQ”). On January appellee, 2, 2008, favor of Mel Ranch David Mann and another inspector (“Mel Acres”), on its negligence claim TCEQ made an unannounced visit to based on alleged HUI’s environmental con- facility HUI’s and met with Leonard Poen- property itzseh, tamination of real owned Mel general manager. Mann testi- issues, In Acres. three HUI contends fied “registered HUI was a large quantity Acres failed to obtain an generator,” essential meaning permitted it was finding permanent injury proper- to the generate hazardous waste in amounts ty legally and the evidence is factually 1,000 and greater kilograms than per month support insufficient to a finding that HUI but was required comply with state negligently permanent injury caused environmental regulations for discharge of property, required support the dam- that waste. HUI was in viola- ages requested by Mel Acres. We affirm. tion of applicable regulations at the time of TCEQ’s (1) visit because HUI failed to Background

I. (2) have a permit, storm water implement a “Storm Water Prevention Pollution operates metal-processing facility HUI Plan,” regulate might materials that in Washington County, Texas. Mel (3) facility rainwater, emanate from the via Acres’s is undeveloped ranchland maintain updated registration information, Highway located across 290 from HUI’s (4) implement a “Source Reduction and facility. A culvert flows downhill from Plan,” (5) Waste Minimization main- facility, highway, HUI’s under the and into required tain the employee-training pro- (“the large stock tank pond”) on Mel gram disposal relative to of hazardous Mel Acres’s wastes. “background” ponds, contains two undisputedly hydraulically are not trial, At Poenitzsch made several admis- connected to and could not regarding sions practices before the have been affected HUI’s activities. (1) TCEQ twenty-five years, visit: for lessee, (a In late Mel Acres’s a cattle disposed spent HUI had blast media rancher, complained that a containing number of its substance particles bead-like experienced calves had died or various de- used to clean prepare metal and it for treatment) Additionally, fects. someone associated further processing and other with the lessee had observed an em- facility HUI materials behind the and used it (2) ployee “dumping” material; large contents of a fill HUI did not have (3) drum into the culvert and pipes were written environmental policy; except discharging 1990s, materials process two-year period from HUI’s for a during the * Margaret ting by Senior Justice assignment. Garner Mirabal sit- adjacent waste into and state consultant industrial had no environmental immediately training waters and instructed HUI to with environmental

employee law; activity. state this compliance with cease ensure his substantiate claim could not Poenitzsch visit, During January TCEQ ob- that, had twenty-five years, prop- samples, soil and water both on-site tained “evaporator solids” and erly disposed of off-site, testing for certain “con- contaminants, solids,” containing “nitriding yielded following of concern” stituents agreed “to Poenitzsch some in landfills. results: *4 the of HUI’s own extent” with the cul- facility On-site at HUI the—in not understand the that HUI did expert building: process vert area behind the regulations. TCEQ waste complexities revealed chromi- sampling surface water that the area between Mann observed um, lead, nickel, ex- copper, and zinc the building and culvert process HUI’s ceeding pH state action levels and level with white and over” dark was “crusted 12.5, which is “corro- above considered sediment, was and moist which soft brown hazardous”; sampling and sive and soil The culvert area despite no recent rain. and ex- reflected aluminum chromium milky appearance water with contained ceeding action levels. state had pooled water the culvert while other the Off-site—in culvert between HUI’s appearance. During the vis- a dark-brown line 290: Highway and water it, acknowledged that HUI em- Poenitzsch chromium, copper, al- sampling revealed 55-gallon containers of emptied ployees uminum, exceeding and zinc state action ground behind material onto process levels; sampling soil revealed aluminum basis, he daily point- on a and building exceeding state action levels. discharge pipe coming from the ed out large pond: sampling Mel Acres water building. investigators Poenitzsch told the copper exceeding reflected state action milky oil and water contained dissolved levels; soil taken.1 samples no me- spent brown blast water contained dia. results, TCEQ Based these concluded significant discharge to that that an unauthorized of industri- appeared

It Mann at the although was al hazardous waste occurred discharge had occurred he duration, facility he was “rath- and affected Mel Acres’s sure of the TCEQ formally the amount waste cited HUI for failure surprisefed] er see Further, discharge.” prevent discharge of industrial hazard- associated with the adjacent no waste into or waters of the noticed that there was berm ous Mann structure, required, prevent and ordered HUI cease all dis- as state other clean-up charge activity and initiate activi- containing spent blast media and water Mann referred the matter to the processing flowing materials from ties. other TCEQ person- Mann subdivision for an en- during applicable off-site rain events. action, ultimately ally flowing water forcement which resulted observed through a fíne. In the refer- facility highway, payment under the ral, potentially Mann noted that the affect- investigators culvert. The informed Poen- basin, area was the entire Brazos River illegally discharging ed itzsch that HUI reference, ease we refer to all metals Although the other materials for which For TCEQ met- pH parties and other consultants tested are as for which various tested als, explained pH is a expert Acres's "the constituents.” judge parameter by quality. water which drainage ERA, destination the APAR. respect ultimate With facility. TCEQ to assess- who employee from HUI’s Relative reviewed the report fine, TCEQ memorandum, concluded HUI noted an ment internal “Over- all, TCEQ “good faith crite- very did meet the this ERA was detailed and well activity negli- organized I ria” because its was either concur with the conclu- or intentional. gent sions there no unacceptable risk to ecological receptors in the intermittent Meanwhile, within a after week stream tank and stock at the Mel Acres visit, TCEQ two pipe HUI discovered TCEQ Ranch property.” provided Quest water, nitriding leaks of rinse has a with various comments relative to addition- content, pH system, in its high processing requirements al for the APAR. At the time issue, replaced pipes and installed a (June 2010), of trial TCEQ yet had not secondary containment mechanism in the APAR, approved the which meant the mat- leak. Additionally, event of another TCEQ ter was still open require could constructed a berm and a dam so that *5 testing. further no from longer facility water flowed HUI’s property onto Mel Mel experts, and ceased Acres’s hired its own dumping spent company materials the facili- behind named “Malcolm Pirnie.” In 2009, May ty- Malcolm Pirnie obtained sendi- ment and water samples surface from the TCEQ required perform also HUI to an large pond, culvert, the one and back- “Affected Property Report” Assessment arsenic, ground pond and tested for alumi- (“APAR”) property, relative Mel Acres’s num, barium, chromium, iron, copper, nick- Mann explained required is el, zinc, pH. and Its of sampling water in there has been a discharge onto other large pond only pH, the revealed alumi- property TCEQ already and means has num, exceeding and iron state action levels designated subject property the as “affect- and detectable concentrations of several Quest Consulting, ed.” HUI Inc. to hired constituents, other exceeding albeit not perform the APAR. In and February May state action levels. Malcolm Pirnie con- 2008, Quest of from samples obtained the trial, cluded in its and at report, reiterated large pond and tested for constituents that the large pond “adversely remained used in those processes and that affected,” and Mel Acres’s has by been TCEQ. Quest’s had tested sam- been as a “functioning prop- “devastated” pling no exceeding revealed constituents erty” by and in limited future use samples action state levels water from discharge of materials. large pond although it the detected excee- trial, contrast, dances of chromium and nickel in sediment In Quest represen- the Thus, samples iron, large pond. Quest opined pH, from the tative that and aluminum concluded was no large pond there evidence that exceedances in the were caused HUI, ongoing by citing, HUI’s activities had than in part, adverse sources other quality large on water impact pond. the fact that exceedances of these constitu- background found in ents 2009, February Quest In submitted the pond. opined He further that constituents TCEQ Quest APAR. notified by below state action levels detected Mal- Ecological APAR was deficient because an large pond colm Pirnie in the had no ad- (“ERA”) Risk Assessment also re- ecological impact pond. verse on the 2009, In quired. Quest November submit- April TCEQ trespass, ted ERA. In nui- notified Acres sued HUI for sance, Quest that approved negligence. alleged it the ERA but not and Mel Acres damage, meas- barred of law or evidence rules permanent it suffered giving weight to the evidence offered proper- value of the in market ured loss fact, (c) of- prove a vital the evidence that HUI did not create ty. A found jury a vital fact is no more than prove fered or on the nuisance (d) scintilla, a mere the evidence conclu- found trespass. commit sively opposite of the vital establishes caused negligence proximately that HUI’s 810; id. at Merrell Dow fact. See injury question” and “the occurrence or Pharms., Havner, Inc. v. $349,812.50 as the difference in assessed (Tex.1997). is The fact finder the sole before market value credibility weight and the judge witness 15, 2010, July On after “the occurrence.” Keller, testimony. City See give their signed judgment a final the trial court 168 S.W.3d at 819. $849,312.50 in actual awarding Mel Acres interest pre-judgment damages, sufficiency reviewing When factual $14,711.65, $42,965.45, court costs of evidence, we consider all the evidence mo- HUI filed a post-judgment interest. if finding only will set aside the notwithstanding the ver- judgment tion for is supporting finding so weak evidence trial, alternatively for new dict or motion against overwhelming weight or so by operation of law. which was denied finding clearly evidence that wrong unjust. Maritime Overseas Sufficiency II. of the Evidence Ellis, Corp. 971 S.W.2d 406-07 *6 (Tex.1998); Bain, 175, Cain v. 709 S.W.2d issues, third con- In its second and HUI curiam). (Tex.1986) mayWe not (per 176 legally factually is and tends the evidence for that judgment substitute our own of prove per- to that HUI caused insufficient pass upon the trier of fact or credibili property to Mel Acres’s injury manent Ellis, ty of witnesses. See 971 S.W.2d at any property in Mel Acres’s val- reduction necessary of 407. The amount evidence these ue. We will first address issues judgment affirm a far less than that is pertinent analysis because our is necessary judgment. to reverse a GTE issue, disposition our of HUI’s first con- P’ship S. Tex. Mobilnet Ltd. Pas tending Mel Acres failed obtain of couet, 599, 61 (Tex.App.-Hous S.W.3d 616 finding permanent injury. of denied). 2001, pet. ton [14th Dist.] legal sufficiency reviewing When evidence, trial, By we review the evidence time of challenged temporary find- dam light most favorable disavowed claim for ing indulge every ages only permanent reasonable inference dam sought City support ages it. Keller v. in market that would dimunition —measured (Tex.2005). Wilson, 802, 822 as a In 168 S.W.3d value result contamination. deed, that, dispute if a reason- do when parties We credit favorable evidence disregard property permanently damaged, ap fact could and con- is able finder damages, trary propriate unless a reasonable fact measure available to evidence owner, not. is market finder could Id. at 827. evidence lost value. See Carriers, Bates, if it would enable a Schneider Nat’l Inc. v. legally sufficient 264, (Tex.2004); person reasonable fair-minded 147 S.W.3d 276 Pickens v. Harrison, 575, 562, 151 Tex. 252 S.W.2d reach the verdict under review. Id. There (1952); legally Trinity Ry. insufficient evi- 582 & S. Co. v. Scho is “no evidence” or (a) 575, (1889); 10 complete field, there is a absence 72 Tex. S.W. dence (b) fact, Thompson, Garey of evidence of a vital the court is Co. v. Constr. (Tex.App.-Austin no caused the elevated level or that this level writ). (1) permanent would remain because highest pH reading on Mel proper- challenge sufficiency HUI does not (10.8) ty was detected in a water sample support the evidence to the finding that it background from the pond, which undis- was negligent respect discharge with could putedly not have been affected facility constituents from its into the cul- (2) activities,2 Malcolm Pirnie ad- vert or dispute discharge such caused tem- mitted at trial it had no opinion on the porary contamination of Mel Acres’s large pH level of that might have existed at a Rather, pond. caused, HUI contends it sample point in the large pond “had HUI most, temporary injury large pond, to the (3) there,” never been Malcolm Pirnie ac- which was alleviated within weeks of its knowledged, “we didn’t attempt to say occurrence, presented and Mel Acres no what pH the large pond] [in would be evidence HUI caused injury; (4) future,” and Malcolm Pirnie re- thus, Mel Acres could not attribute any turned in 2010—about a alleged lost market value to HUI. HUI year after the May 2009 sampling and also challenges the lost-market-value cal- shortly before did perform trial —but culations of Mel Acres’s damages expert. any testing, for pH, even despite knowing pH was at issue. Damage A. Permanent iron, Relative to aluminum and HUI, HUI ar- According to as a matter of Texas gues that Mel Acres law, prove failed to plaintiff in an environmental-con- caused elevated levels of these constituents tamination case cannot prove permanent background because pond also had injury to its unless constituents concentrations of aluminum and iron ex- exceed state action levels. levels, (2) ceeding state action Malcolm argues no constituents exceeding *7 provided Pirnie no opinion regarding the state action levels that remained in Mel (3) source of aluminum in large pond, pond Acres’s large could be linked to HUI. Malcolm Pirnie acknowledged it conducted quarrel does not HUI with the Geo Stra- analysis no statistical to demonstrate irons TCEQ ta or findings copper exceeding large pond levels were different state large pond in, action levels in the than levels in the background pond, and respectively, January December 2007 and (4) presented Malcolm Pirnie no evidence However, sampling. 2008 HUI character- to analysis by Quest, refute the statistical event, findings izes these as a temporary expert, showing could not HUI have emphasizing testing by expert that its caused the iron large pond. levels shortly thereafter revealed no constituents levels, Finally, on exceeding state action HUI relies the fact that including TCEQ approved ERA copper, large pond. in the and con- HUI also ac- Quest’s curred with knowledges May 2009 conclusion that “there sampling by Mel was no Pirnie, unacceptable risk to the expert, ecological Acres’s Malcolm which re- aluminum, receptors” large pond. in the pH, flected exceeding and iron state large pond. action levels in the Acres, According Mel proved it that

However, pH, relative to the ar- permanently injured HUI large pond gues (1) prove Mel Acres failed to presented because it evidence that HUI pH reading background pond, 2. This in the by Mel obtained Acres’s lessee in December HUI, by sampling referenced was revealed in 2007. does levels, recovery of lost market value uisite of state actions caused exceedances damage pH large permanent in the not dictate that the elevated including case, (2) permanent be this require physical must Texas law does not pond, but —in Specifically, in the cases exceeding state contamination. of constituents existence by parties proposition ac- cited negligence to maintain both action levels tion, appropriate contami- that market value is the proved other lost and Mel Acres damages permanent dam- large were attributable measure of pond nants in the no pre- there was issue HUI, significant age property, it take time will stigma permanent sented on whether a large pond of the before restoration Alternatively, market value Mel that diminished satisfied “background levels.” that, gen- if See permanent-damage requirement. even the contamina- suggests Acres 264; Pickens, Bates, temporary, erally it nevertheless suf- S.W.3d tion were 575; 575; Garey Schofield, even 10 S.W. damage because the S.W.2d permanent fered Co., perma- 865. temporary contamination created Constr. resulting in property, on the stigma nent above, HUI cites several As mentioned value. lost market Mel support argument its that cases to law, cannot, prove as matter of Acres Mel We need not decide whether Acres permanent physical contamination contamination of the proved permanent establishing property without constituents agree that large because we Mel pond in the action levels remain exceeding state permanent damage causing proved Acres pond. response to Mel large permanent value virtue of lost market contention, HUI also cites stigma temporary even the con- stigma created authority these cases We will first address HUI’s tamination.3 stig- may permanent recover even for recovery suggestion such con- resulting temporary physical ma under law damages precluded Texas party tamination for same reason —a supporting recov- then outline evidence may form of not recover ery case. damages present of such damages establishing that constit- without Recovery damages due exceeding state action levels remain uents temporary contamination disagree that these We no court has HUI asserts Texas support proposition. cases such a *8 may held that a owner recover Cabana, Inc. v. HUI first relies on Taco property. for a on its damages (Tex.App.-San Exxon 5 773 Corp., S.W.3d However, any HUI does not cite Texas denied) Z.A.O., 1999, pet. Inc. Antonio recovery lost mar authority precluding Venture, Yarbrough Drive Joint Center stigma. ket value due Paso (Tex.App.-El 50 S.W.3d 543-44 in the followed equates perma- pet.), In the no. which court regard, this Cabana, recovery plain- In Taco the damage prerequisite nent of Taco Cabana. on which the de- permanent 'physical purchased property lost value to tiff market However, previously operated gas sta- existing authority the fendant had damage. closing 5 at 774-76. When permanent damage prereq- such tion. S.W.3d requiring any controverting evidence 3. we whether Mel have not outlined Because need not decide proved permanent by contamination the in presented Mel Acres or instances which large we pond, have outlined HUI’s con- qualified testi- Malcolm Pirnie or clarified the regarding tentions the state the evidence mony by above HUI. cited damage relative to the issue of

591 station, Therefore, gas plaintiff the defendant detected con- the did not establish its action in exceeding trespass state levels action taminants because there was no evi did water and contaminants which samples dence that the defendant failed to remove state level in soil sam- exceed actions containing exceeding soil contaminants required by at 774-75. the ples. Id. As Id.; state action levels. see Yar Commission, Texas the defendant Water brough, S.W.3d at 543-44 (citing Taco initiated measures to remediate contami- gas-station Cabana when holding lessee exceeding nation levels. at state action Id. trespass was not liable in to lessor for is- Ultimately, 775-76. the Commission contamination of unreasonable letter, approval indicating sued a final no levels because State let provided closure activity further remediation was neces- stating ter by constituents caused sary. at constructing Id. 777. While leak in lessee’s tank had cor storage been the property, plaintiff restaurant the levels). rected below actionable additional contaminants discovered soil Contrary to suggestion, the Taco that did not exceed state action levels Yarbrough Cabana and courts did field, had area of former tank which broadly hold that a plaintiff may never not been disclosed the defendant to prevail against a defendant contamina- Id. plaintiff Commission. The removed plaintiffs tion of the on- property without soil resuming contaminated before con- going presence of exceeding constituents eventually struction and sued the defen- state action See Yarbrough, levels. dant, seeking to recover remediation 543-14; Cabana, S.W.3d at Taco 5 S.W.3d profits. costs lost Id. at The present 780. issue in the case In court portion appeals’s relative to the claim negligence is not con- HUI, upheld cited the court inquiries fined to the more narrow in Taco grant trial court’s of the defendant’s mo- or Yarbrough Cabana of whether the de- judgment notwithstanding tion for the ver- trespass they fendants committed because jury damages dict after the awarded left “unreasonable levels” of contaminants trespass. Id. at 780. Relative to plaintiffs on the Yar- See claim, trespass charged with 543-44; brough, 50 S.W.3d at Taco Caba- determining whether defendant “know- na, 5 S.W.3d at 780. Taco Cabana ingly left of ... gaso- unreasonable levels Yarbrough courts court did not ad- line ... contaminants on the plaintiffs dress whether the could recover damage plaintiff].” caused to [the negligence for lost market value due Id. at The plaintiff 780. contended that the stigma resulting from former contami- trespass defendant committed because ac- exceeding nation via constituents state duty it had a to remove the contaminated Yarbrough, tion levels. See soil at Id. issue. court con- 14; Cabana, Taco S.W.3d at 543— *9 any cluded re- common-law duties to relies on two interrelated by move displaced contamination had been cases: Trans Ronald Holland’s A-Plus the applicable regulations administrative Automotive, & mission Inc. v. E-Z Mart Legislature delegated because the had Stores, Inc., 749 (Tex.App.-San 184 S.W.3d determining the the Commission task (“E-Z I”); pet.) Antonio no Mart appropriate Be- clean-up standards. Id. Stores, applicable regulations cause and E-Z Mart Inc. v. Ronald Hol the dictate & necessary, corrective action is “un- land’s A-Plus Transmission Automo Inc., tive, 358 665 (Tex.App.-San reasonable levels” of contaminants are S.W.3d denied) (“E-Z 2011, pet. those that exceed state action Id. Mart levels. Antonio 592 ”). Mart, of state-action lev- owned contamination excess one defendant

II In E-Z damages are adjacent [plaintiffs’] els on the land’ gas operated a station I, (quoting E-Z Mart at E-Z recoverable.” Id. plaintiffs’ property. 756). experienced I, The defendant at 752. 184 S.W.3d at S.W.3d MaH groundwater beneath contamination that the E-Z Mart cases We conclude of leaks in under because station controlling present in the case. also are not at 752-53. system. Id. storage ground recognize generally suggest- We the court performed remedia After the defendant plaintiffs prop- of a ed that contamination Resources by Texas Natural required tion exceeding action via constituents state erty (TCEQ’s prede Commission Conservation damages. recover See required levels is cessor), no determined Commission 756; I, E-Z Mart E-Z Mart 184 S.W.3d at required action was further corrective II, at the court 673. 358 S.W.3d Id. letter. at 753. a site-closure issued levels specifically did not state such later, plaintiffs discover years Several in order for the ongoing must remain contaminated property was ed their plaintiff damages. general- to recover See allegedly mi compounds fuel-related I, 756; ly at E-Z E-Z Mart 184 S.W.3d defendant’s station. Id. grated from the II, specifi- at Mart 358 S.W.3d 673. More an plaintiffs sued this defendant and not address the issue cally, court did formerly the sta party, other who owned present case: whether the involved for property during periods, tion relevant lost mar- plaintiff permitted was to recover nuisance, trespass. Id. at negligence, ket value from created resulting granted summary The trial court 752-53. via former contamination of its on the judgment for defendants that did exceed state action constituents plaintiffs’ claims were ground that I, 749; levels. E-Z Mart 184 S.W.3d See a matter of law because the barred as II, Indeed, E-Z Mart 358 S.W.3d 665. let had issued site-closure Commission was in E-Z presented there no such issue ter. Id. at 753-54. present plaintiffs Mart because the did reason- appeals disagreed, The court of via con- ongoing evidence of contamination longer no ing that the fact there were exceeding stituents state action levels. exceeding contaminants state action levels I, 756-58; at E- See E-Z Mart 184 S.W.3d remaining on the defendant’s did II, Z Mart at 672-76. S.W.3d liability con- it from exonerate Instead, sister courts have al several property in plaintiffs’ tamination of the recovery stigma damages lowed Id. at excess of state action levels. estate, physical injury remediated real summary judgment The court reversed the albeit contexts other than environmental presented evidence plaintiffs because instance, Royce For contamination. lev- exceeding state action of contaminants Homes, Humphrey, L.P. Id. at 756-58. E-Z els pet. 573-74 (Tex.App.-Beaumont subsequent Mart II the defendant’s denied), claimed his home was plaintiff jury verdict in favor oí the appeal after a wrongful to the defendant’s flooded due When plaintiffs. 358 S.W.3d 668-69. perform of surface water while diversion legally suffi- concluding the evidence was ing adjacent property. an construction on jury’s award of the support cient to *10 trial, plaintiff presented At real- value, among other plaintiffs’ lost market that, appraiser who based and nuisance theo- estate testified damages, negligence homes, ries, experience, on his flooded even opinion reiterated its earlier the court once, only the flood has occurred holding, long as “as as ‘there is evidence when generally suffer a diminished market value entail finding of permanent physical permanent stigma. damage. Rather, due to Id. at 575-76. See id. at 1246. citing allowing

After other Texas cases Stigma damages are a perma- facet of stigma-damage awards real-estate damages, nent and recovery stigma cases, plaintiff pre the court concluded the damages is compensation proper- for a sented sufficient legally ty’s evidence that his diminished market value in the ab- ” home “permanent suffered diminished market value sence ‘physical’ damages permanent, majority and these harm-A al of courts from oth- jurisdictions er ... though the court ultimately recovery held the ex allows when a defendant’s pert’s trespass or nuisance prove was insufficient to has caused some temporary physical in- amount of diminished market value. Id. but, to the property 577-80; Homes, despite Country Village see Inc. temporary injury’s remediation, (Tex. Patterson, 413, v. 236 S.W.3d 443-44 property’s market value remains de- 2007, App.-Houston pet. grant [1st Dist.] pressed Thus, .... stigma damages com- ed, w.r.m.) judgm’t vacated (allowing pensate for loss to the property’s market recover, against homeowner to in suit value resulting from long-term nega- home, builder for defective construction of tive perception of the property in excess difference in market value between home any recovery obtained for the tempo- home, if properly constructed and re rary injury itself. paired, due to stigma); Perry Homes Alwattari, 33 S.W.3d 386 (Tex.App. (internal omitted). Id. citations The denied) -Fort pet. Worth (allowing reasoned, court “Were this residual loss against homeowners to recover their con due to compensated, plain- struction company for dimunition in fair property tiffs permanently would be de- remaining repair market value after of de prived significant value without compen- damages fective foundation as actual sation.” Id. The court pronounced that DTPA). economic loss recoverable under stigma damages are therefore recoverable (1) plaintiff Utah when a demonstrates Moreover, juris- courts in several other the defendant caused temporary some dictions have recovery allowed in environ- physical injury plaintiffs land and mental contamination cases when a defen- repair temporary of this injury will not dant temporary physical injury caused return the value of property to its but, plaintiffs property despite remed- prior lingering negative level because of a iation, the property’s market value re- public perception. Id. at 1246-47. depressed stigma. mains due to We find court Utah cited In re Paoli R.R. persuasive. these cases Litigation, Yard PCB 35 F.3d 717. 797-98 Co., For example, Drug Walker Inc. (3rd Cir.1994), court, in which the applying Co., v. La Sal Oil P.2d 1245-48 law, Pennsylvania recognized that normal (Utah 1998), Utah, the Supreme Court of ly, damages courts must award for diminu addressing an issue of first impression, tion of value cannot be held that a owner was allowed to however, repaired; the market sometimes recover for lost market value due to the repair fully fails and costs are not compen by temporary created contamina- satory compensation and absent for this tion of its neighboring gas loss, remaining a plaintiff permanently station. recognized perma- The court deprived significant value without com damage nent to land does not necessarily pensation. Consequently, the court inter

594 allowing simply, recovery precluded if even law as a Pennsylvania preted value of to for diminished market value results from a plaintiff recover lost showing permanent property without after of stigma remaining its remediation (I) if the defendant has physical damage contamination, Mel Acres would physical damage temporary physical caused some have for such a loss. no recourse (2) plaintiff plaintiffs property, to the that Texas law HUI asserts does damage this will repair of demonstrates allow landowner to for “fear” or a recover prior value to its not restore the to “apprehension” physical injury without level, there plaintiff shows is cites property. Maranatha Tem 798; land. at risk to the Id. ongoing some Co., Enterprise v. Products 893 ple, Inc. Terror-Products, v. Inc. Gen. also see Kraft 92, (Tex.App.-Houston S.W.2d 99-100 [1st Foods, Inc., 89, (Ind.Ct.App. N.E.2d 93 653 denied), 1994,writ in which the court Dist.] 1995) holding In re Paoli when (citing permit to a cause refused nuisance-in-fact recovery permits Indiana law fear, apprehension, of action based on or for market value of damages lost resulting other emotional reaction con after remediation environmental operation the lawful of industries in Texas rule is consistent tamination because this or injury body.” that are in without to “land Similar principle damages with basic compen fairly adequately authority tended a ly, cites two cases as loss). its plaintiff sate for plaintiff may negligence not assert claim is injury when the claimed economic reasoning with the agree We Hour-Tex, loss. v. See Inc. Landmark courts, well as the conclusions these as 103, Graphics, (Tex.App. 26 107 S.W.3d courts, by our sister as cited reached 2000, pet.) (stating, -Houston no [14th Dist.] Axiomatically, damages above. actual are rule, “Under the economic loss economic for compensate plaintiff intended damages they are not recoverable unless Co., v. 834 Eagle See Ins. loss. Geters are harm accompanied physical actual (Tex.1992) 49, (recognizing S.W.2d 50 persons property”); or their see “damages” “compensation are as defined Inc. Ditching, Coastal Conduit & v. No money inju law for imposed loss 282, ram Energy Corp., 29 S.W.3d 285-90 Beall, ry”); Corp. Marauder 301 S.W.3d 2000, no (Tex.App.-Houston [14th Dist.] 2009, (Tex.App.-Dallas pet.) 822 no pet.). eco Maranatha this (stating purpose that “sole of actual dam principle inapplicable nomic-loss are ages is Jordan v. Cart compensation”); present case a physical because there was (Tex.Civ.App.- 801 might, injury Mel if property, even writ) (“Generally, Worth no one Fort remediated. Mel does not seek injured by who is the act another is damages appre for some abstract fear or compensation entitled recover it might hension that suffer a but loss prejudice nearly loss or suffered so that as damage compensation flowing received will instead seeks measure of possible the loss.”). Quite be with his from actual contamination of its property.4 commensurate fact, specifically solely plaintiff’s property In the Utah court declined on fact that damages stigma may vicinity activity to address whether of contaminated site or other inju- physical might holding be recovered absent former create fear and instead Co., physical damage ry Drug plain- See Walker there must be some 10; Paoli, stigma damages In tiff's re- P.2d 1246 n. see also re before are coverable). (distinguishing pro- We F.3d at n. 64 cases do not hold that dam- hibiting recovery stigma damages ages may physical based be recovered absent some *12 Finally, that suggests Mel Acres’s duced the market value. She reached this stigma a new contention is cause of action conclusion consulting with cattle ranch- investors, ers, brokers, appeal. raised for the first time on We real estate and fi- below, trial, nancial disagree. explained As institutions ascertain their views only properties permanent regarding Mel Acres not claimed with environmental stigma comparable presented researching contamination but also prop- evidence (other erties supporting theory properties a that it lost contaminated in sustained area) stigma percent market value due to if the determine the even reduc- tion in ar- market value temporary stigma. contamination was due to Further, further McKinney explained such to the gued theory jury. stigma of merely contamination exists it such contention is because would be encompassed prudent claim for Mel negligence within does Acres to disclose the con- thus any potential tamination to separate buyer not constitute a cause of action. avoid liability, the particular, In lost market value contamination is due documented records, in stigma TCEQ there temporary perception even from contamina- is a increased merely tion one manner in which Mel “environmental risk” associated with contaminated permanently property, “perception Acres claimed it was dam- valuation, in aged everything” as a negligence result of HUI’s real-estate based discharging availability on of “a lot” of constituents onto Mel Acres’s ranch area, land in the a property. purchaser has the op- tion to buy property stigma with no rather Accordingly, we conclude that Mel Acres than with a stigma. precluded is not under Texas law McKinney opined that stigma recovering value stig- lost market due to $1,397,500 caused lost market value of ma, as a form permanent damage, —a 60% reduction from unimpaired value. the evidence the stigma shows resulted In her report, McKinney recited that she physical from a injury. TCEQ’s based this findings of damages Evidence of due contamination. McKinney calculated the temporary contamination figure determining above the market presented Although a dam February values before and after ages expert, Malcolm Pirnie date TCEQ’s confirmed 2008—the initial investiga- that, from standpoint of an report, finding environ tion illegally HUI was dis- mental expert, gives environmental impact charging industrial waste into hazardous property a stigma any purchaser because This preceded culvert. date further files, TCEQ pub can obtain the reports ultimately which are providing competing lic damages expert, opinions records. As its Mel permanent on whether there was presented testimony Kathy TCEQ’s contamination of the large pond: McKinney, ERA, a real appraiser, licensed estate ultimate approval of the which twenty years experience with appraising Quest concluded unaccepta- there was no property Washington County. ecological large pond, McKin ble risk to the ver- ney concluded that there is a report finding per- sus Malcolm Pirnie’s attached to Accordingly, manent contamination. contamination, report because of re- McKinney’s supported finding has injury challenge sufficiency We need not address HUI does tempo proved support finding issue because Mel Acres evidence that it caused rary physical injury injury. from HUI’s activities and such an *13 (5) not; is a has there than one who documented tions contamination

that even the a poten- concern in lost effect” which would early 2008 resulted “risk TCEQ in goes per- it to stigma, irrespective because “all purchaser due to tial market value may purchaser was remediat- potential contamination ception” whether the —the Moreover, ongoing. Mel or remained HUI will contaminate ed fear (6) if Mel McKinney that even testified even again; HUI’s property Acres’s perma- a up,” is “cleaned Quest, Acres’s not could expert, environmental public per- (7) based on stigma remains nent Mel a and possibility; such eliminate Additionally, the of future risk. ception any con- disclose documented Acres should that further could have concluded jury competing opin- well as the tamination as orders, TCEQ reports and issued after experts regarding con- parties’ of both ions report approval but before initial tinuing contamination. stig- ERA, attachment of a bolstered the ample additional evi- jury heard identifying constit- specifically ma more finding stigma a a supporting dence exceeding state action levels detect- uents temporary from contamina- resulted even culvert, facility, in the on-site at HUI’s ed (1) disposed of blast me- spent tion: HUI pond. the large and in processing materials on and other dia position, its with dam- Consistent twenty-five years and failed ground for Robinson, expert, Rudy was retained ages regu- environmental comply pertinent with the amount only an on provide (2) lations; TCEQ illegal- HUI determined alleged temporary damages —loss near the culvert to ly discharged waste damages. opposed use—as degree and lacked controls “surprising” Therefore, provide Robinson did not Mel flowing materials prevent negate on lost market value estimate (3) pH pond; TCEQ detected large Acres’s stigma. on cross- that there is a facility— at a hazardous level Robinson, examination, ap- a real-estate constituents the culvert—and other near environmentally praiser specializes who HUI’s fa- exceeding action levels on state acknowledged properties, contaminated culvert, large pond and in the cility, spe- general concepts or facts following (4) expert, HUI’s environmental (copper); case, supported a to the which present cific migrated constituents Quest, agreed that tempo- even from finding stigma there is facility pond; and large from HUI’s (1) rary under certain cir- contamination: $900,000, (5) for Quest paid HUI cumstances, contamination environmental but analysis relative to this suit

may the market value of reduce remediation efforts. marketability because can deter that, large pond, in the recognize We (2) Mel Acres is a for- development; TCEQ an elevated level did detect merly property” under the “contaminated exceed- or all of the other constituents pH guidelines, and re- appraisal uniform HUI on HUI’s state action levels found ing materials, including leased chromium facility Regardless, in the culvert. nickel, migrated to Mel Acres’s above, evi- presented Mel Acres explained (3) even remediated property; contributing to principle one dence that market, “impacted” can still be subject the risk the of a creation one his previously advised Robinson has again. become contaminated property will potential own about a discount clients Therefore, considered could have purchaser property; remediated former activities and extent of HUI’s next to a prefer acquire property would even fácil- found on HUI’s regula- has with the constituents neighbor complied who determining, at B. Calculation in the culvert when Lost-Market-Value ity and least, might perceive potential buyer that a McKinney’s also challenges calcula- will contaminate risk that a future tion of lost market for several value rea- property again (1) McKinney sons: did not know what *14 regard, we that HUI asserts

In this note constituents contaminated Mel Acres’s leak char- TCEQ pipe cited for a and HUI to property; assign per- she failed an discharge as isolated oc- acterizes centage of the market value any lost to However, investigation currence. HUI, by contamination opposed caused as that its cita- TCEQ did not state reports, contamination background pond; to of the pipe leak but solely tions were based (3) the was and calculation based on flawed general discharge discussed the of rather methodology. from the into the property

materials HUI knowledge 1. regarding par- Lack of daily practice and the employees’ culvert ticular constituents emptying process containers material of of fact, TCEQ ground. In was not onto First, McKinney HUI asserts could until pipe of the leak after Mann informed link of not her calculation lost market val Poenitzsch had visited the site and notified any alleged by ue to contamination illegally discharging indus- that HUI was because she did not know what constitu adjacent waste into and to state wa- trial ents contaminated Mel Acres’s is no data before recognize We there ters. However, argues, McKinney as Mel Acres long how demonstrating late 2007 not retained on what opine was constitu adversely discharge may have affected the ents contaminated the and based hand, pond. recog- On the other we large opinion of her on the fact contamination. any lacking such data is because nize McKinney’s import opinion of is that testing was no reason until a there for contamination from HUI caused the lost lodged was in late There- complaint market value because she cited the TCEQ fore, the lack of data does foreclose the report, only which discussed HUI’s activi of the large that contamination possibility Therefore, we it was unnec ties. conclude 2007; existed it is a rea- pond before late essary McKinney articulate what sonable inference that contaminants contaminated Mel particular constituents pond suddenly appear did not on the large her Acres’s to link re TCEQ’s of the 2007 visit. testing eve lost activi garding market value HUI’s Thus, reasonably could have con- ties. buyer potential might that a view cluded large pond 2. Contamination ver- large pond having of the as contamination background pond sus period before significant occurred for a remediation —a factor consid- any relevant Next, complains that McKin again that contamina- ering both former ney percentage could not of the assign a con- tion risk future contamination any market contamination lost value to tribute to creation of a stigma. HUI, to contamina opposed caused pond. of the summary, background recog In we conclude the evidence is tion We constituents, legally factually support sufficient a nize that evidence indicated iron, aluminum, including finding pH, that Mel exceed Acres suffered ing damage tempo- in the form from state action levels measured at contamination, resulting points background pond. in a rary lost mar- various the possibili- we cannot foreclose ket value. large pond meas- it is the Finally, consider jury did such ty that the public record available the focus of determining lost market urements ad- buyer: TCEQ’s any potential reports attributable value of Mel large pond, dressed contamination contamination solely discharge these documented HUI’s reports jury assigned an because the large pond activities, large affect which could figure than the less significantly amount large “affected pond and the was the pond, McKinney. advanced property” purposes APAR Nevertheless, iron exceedances of ERA, by TCEQ. HUI does ordered background pond cit- and aluminum ex- public record cite evidence that *15 by Malcolm were detected ed HUI TCEQ, addressing party, of neutral ists a TCEQ’s first re- year Pirnie a after over background the alleged contamination of date which the the on port, provided pond. declined, according to value market factors, the all of the above Based on re- TCEQ’s subsequent and McKinney, the reasonably have attributed jury could the constituents found documenting ports temporary to HUI’s contamination culvert, in facility, the and the in on HUI’s ele- large pond irrespective the jury the could large Consequently, pónd. background pond. in the vated constituents reasonably the have determined McKinney’s methodology iron before these already had attached Finally, briefly HUI also asserts background pond the levels in aluminum McKinney’s regarding lost reported.

were market was on flawed method value based background pH The elevated McKinney sales-compari ology. used the by Mel Acres’s former pond was detected approach by locating other son contaminat TCEQ investigation. lessee before the how the properties determining ed However, lower this measurement was McKin market reacts contamination. facility by than detected on HUI’s pH the con ney she could not locate testified TCEQ, conclusively does not the evidence in properties Washington taminated Coun general this isolated meas- ty, the cause of so she searched the area establish (whether county a proper controllable around the and located two urement it (1) “Sebastian condition), County: ties Grimes the and the evidence does es- property; the “Sheri site”—a sold a hazardous effect the tablish it had con property, dan site”—a listed under contrast, TCEQ In de- background pond. McKinney tract at the time trial. deter at HUI’s pH tected a hazardous level percentage respective mined the that these facility, well constituents ex- as as other from prices sales and contract decreased on-site, in levels the ceeding state action McKinney then unimpaired the values. culvert, large pond, emanating the lost mar percentage used that calculate Again, jury the from activities. ket value of potential buyer a could inferred that have properties that these other contends all facts and decide might consider these comparable. not truly the relevant risk is future contamination buyer’s possibility beyond the site, HUI —a the as- Relative to Sebastian Thus, contaminated, could reason- control. have “had never been serts it ably pH special measurement relation- discounted was sold as a result of or con- but at background pond creating ship, length, as and was at arms be- price buyer acknowledges was tributing stigma. Robinson, expert, determining toward whether there is a low market.” pur- stigma. he reported that called indeed chaser, who site was not con- stated the In attempt an impeach McKinney’s However, McKinney disa-

taminated. testimony that the Sheridan site had been stigma remained on greed, explaining a levels, remediated to below state action duty to because the seller bore a site HUI also emphasized that above-cited partitioned it had been from a disclose document mentioned alternative concen- had been contami- larger property which tration had been monitoring levels set for reported nated. Robinson also water, ground apparent as deviations from purchaser acquired proper- stated he typical protective state or federal concen- ty employer his former a “sweet- tration levels. Robinson agreed early heart ter- compensate deal” that, although Sheridan site is not Although employment. mination his “clean,” been subjected it has to a “form” McKinney acknowledged impor- that an Moreover, of remediation. ac- Robinson comparable in identifying tant factor that, knowledged applicable guide- under *16 determining is the sale whether lines, an appraiser permitted is to exercise transaction, arm’s she length was an did professional judgment relative whether necessarily that agree a “sweetheart adjustments should be made to account for an length deal” fails to constitute arm’s attempted, but uncompleted, remediation Further, on transaction. cross-examina- deciding comparable whether a prop- tion, agreed that he not as- Robinson did erty is for appraising suitable use in the certain the terms of the “sweetheart subject property. than suggested deal” and that other ob- acknowledge presented We evi- documents,

taining the sales he did not site, dence that the Sheridan as a Super- independently verify the information re- by fund site monitored federal govern- layed by purchaser regarding the ment and on a “national placed priority “sweetheart deal.” list,” greater degree a far of involved con- Nonetheless, jury disregard- even if the large pond. tamination than Mel Acres’s McKinney’s ed use of the Sebastian site as Robinson that the Sheridan explained site a could have nonethe- comparable, jury of thirty years was monitored at a cost McKinney’s less of the million, considered use at and some constituents $16-17 comparable. site Sheridan as a HUI as- “off that site were the Richter scale” when McKinney “incorrectly serts that assumed compared regulatory limits. site], superfund a site that [Sheridan hand, On the other the evidence does yards

had of affected thousands cubic support ac- suggestion its soils state lev- and sediments above action solely tions from isolated pipe resulted an els, been had remediated to below state leak; instead, above, Mel discussed action levels.” presented evidence HUI dis- Contrary a suggestion, posed to HUI’s docu- of industrial waste next to the cul- trial, twenty-five years, TCEQ ment at vert for detected presented discussed degree includ- previous procedures “surprising” discharge, remediation for the a site, ing lev- groundwater exceeding Sheridan indicated was constituents state action levels, contaminated, TCEQ pH than soils just rather els at hazardous Regardless, McKinney public maintained a record HUI’s activi- sediments. ties, contamination, TCEQ’s action type testified that enforcement was still water, dispositive soil time open whether or is not at of trial because the weight free decide what had not large pond Acres’s of Mel APAR this Accordingly, assign constituents re- such factors. some yet approved, been Royce even if large pond distinguishable in Mel Acres’s situation mained (cited levels were exceeding by dissenting colleague) actions those state our Homes activities, spent by McKinney’s opinion was not not caused because relative $900,000 to consult expert conversations with merely based her also remedia- litigation this but to not professionals. various Cf. tion, of whether constitu- regardless Indeed, verdict indicates 578-80. large pond,

ents remained jury may considered the differences have relevant activities HUI’s above-cited of Mel Acres’s between contamination determination; i.e., risk of it the Sheridan site because pond. large contamination future Mel Acres lost market value found Further, explained McKinney perfect than the $349,312.50 significantly lower — property “exactly would be comparable ($1,397,- figure McKinney advanced but she has never like” the same 500). a 15% jury’s figure reflected McKinney ex- that situation. encountered the 60% reduction in value—not reduction comparables she pressed confidence espoused McKinney.5 all the Under they reflected the mar- used and believed circumstances, we above cannot conclude they were not perception though even ket’s in- factually legally evidence was admitted that it “perfect.” Even Robison support jury’s finding. sufficient comparable property is difficult to find Accordingly, we HUI’s second overrule *17 sites.” In “particularly on environmental and third issues. rationally have regard, jury this the could calculating lost market value inferred that Damage Jury Finding III. on Permanent Mel was an exact property issue, that we In its first HUI contends compara- were few science because there judgment must reverse and render analysis, much less properties ble the Mel to HUI because Acres failed obtain nature of any properties with exact jury finding on the essential element property, contamination as Mel Acres’s from permanent injury resulting HUI’s degree involved some plus the calculation negligence. regarding prospective how a speculation jury an- negligence, Relative to buyer react to former contami- might following question to swered “Yes” Robinson, Notably, expert, nation. respect with to HUI: figure provide any controverting did not QUESTION NO. 2 was limited to deter- because his review damages for loss of use. mining temporary if negligence, any, of those Did the proximately below cause the oc- named Therefore, criti- we conclude injury question? in currence or conclusively negate McKin- cisms did not person company or site a com- The law ney’s use of the Sheridan as forbids into or regarding discharging industrial waste parable her lost from in A adjacent any to water the State. of Mel Acres’s property; market value rather, comply negli- to law is merely factors failure with this the criticisms gence in credibility opinion, of her itself. relevant to $2,329,000. agreed, McKinney opined, impairment was and Robinson value that market before

601 person company Transp. Payne, forbids a Public 838 The law or suffer, (Tex.1992) cause, allow, that, for the permit proposition or collection, handling, storage, processing, when a fails to plaintiff request an affirma- in of industrial solid waste disposal or finding regarding tive an omitted element discharge as to cause the such a manner objects missing and the defendant to the of in- discharge imminent threat of or element, trial court judg- must render adjacent solid waste into or dustrial asserts, ment for the defendant. As HUI obtain- the State without the waters it objected in trial court to of a lack authorization dis- ing specific for such separate jury question on Mel whether from the Texas charge Commission a permanent injury. Acres sustained Quality. Environmental A failure contention seems based on with this law comply negligence is premise Mel Acres could not recover itself. lost value absent a permanent market was in- damages, Relative physical injury question answer the following structed to above, rejected as discussed we have this Ques- any party if “Yes” for it answered premise because the law does not preclude nuisance), (concerning Question tion Mel recovering Acres from lost market above), Question (concerning (quoted permanent value stigma resulting due to trespass): temporary physical even To injury. QUESTION NO. 5 the extent HUI contends that Mel the difference between What required separate, to obtain a express of the real owned market value damage, finding even in Washington Acres Ranch in stigma, form of this prerequisite Texas before the occurrence County, value, recovery disagree. of lost market we of such and the market value question, ques- after the occurrence in issues need not be Uncontroverted tion? *18 Keller, jury. City the 168 submitted to of value” amount “Market means the (citing Bar S.W.3d at 814-15 Sullivan v. paid willing be in by that would cash a nett, 39, (Tex.1971); Wright 44 471 S.W.2d desires is not buyer buy, who to but Co., 474, 296 Compress v. Vernon 156 Tex. buy, to to a who required willing seller (1956); Clark v. Nat’l S.W.2d 523 Life sell, necessity but is under no desires to Co., 575, & Accident Ins. 145 Tex. selling. of (1947); S. Underwriters v. S.W.2d in dam- Answer dollars and cents for Wheeler, 350,123 340, 341 132 Tex. S.W.2d any. ages, if (1939)). presented Acres uncontro- answered, “$349,812.50.” jury The that it permanent verted evidence suffered form the HUI, damage stigma of a on According was re- Mel Acres result of in property negligence as a quired separate jury finding a on to obtain wa discharging industrial waste into state injury prereq- permanent ters, recovery of value. which waste flowed to Mel Acres’s uisite to lost market above, noted dam principle large pond. the that a As plaintiff HUI cites Robinson, jury ages expert, negate to obtain did not bears the burden affirmative every that there is a on findings necessary dispute stigma element of otherwise Inc., Even on does Frito-Lay, appeal, claim. Ramos v. 784 the See (Tex.1990). stigma, also not of a dispute arguing existence stigma & of a is insuf- Department Highways cites State instead that existence of anal- a “before” and “after” law to constitute She conducted a matter of ficient as in market ysis compute difference physi- ongoing absent damage permanent Acres Ranch’s 155.27-acre value of Mel we have concluded Because injury. cal tract, stig- which she attributed “market are recoverable as stigma damages of surrounding the as a result ma under damages permanent contamination” Houston Unlimited. law, evidence the uncontroverted Texas property satisfied stigma on Mel Acres’s computed pre-contamina- McKinney requirement. permanent-damage value of the tract as tion “before” market Mel Acres we conclude that Consequently, acre, $15,000 a total of per approxi- find- required separate to obtain was not $2,329,000. mately Houston Unlimited’s damage, ing permanent agreed figure. with this expert appraiser jury was determin- remaining for the issue post-contamination “af- compute To market value result- ing in the dimunition value, two McKinney relied on ter” market stigma-an issue ing from The source sources of information. first inquiry via the re- submitted to comparison” analysis of two was a “sales in value be- difference market garding the tracts, site Grimes other the Sebastian According- fore and after the occurrence. County and the Sheridan site in Waller first ly, issue. we overrule HUI’s County; according McKinney, the sales prices for these sites reflect diminution judgment. court’s We affirm trial envi- in market value due to from BOYCE, J., dissenting. second ronmental contamination. The McKinney had source was conversations BOYCE, Justice, J. WILLIAM “a “in market- people with bunch” dissenting. ranchers, including property own- place,” testimony prof- expert appraisal ers, investors, brokers, fi- real estate legally Ranch is insuf- fered Mel Acres institutions, nancing out their to “find what support jury’s award of ficient ... properties was had envi- feel $349,312.50 as the diminution market them.” ronmental attached to value to the conduct Hous- attributable information, Based on these sources Unlimited, Metal Processing. ton Inc. post-contamina- McKinney opined that the Therefore, respectfully I dissent this tion “after” market value of Mel affirming the trial court’s judgment court’s $931,500— Ranch’s 155.27-acre tract Mel Acres Ranch. judgment favor of percent approximately 60 less than *19 “before” market value. Houston Unlimit- proffered Mel Acres Ranch’s Because expert not an appraiser compute ed’s did testimony sup- does not expert appraisal the Mel Acres “after” market value for award, this port jury’s court should Ranch tract. ren- judgment trial court’s reverse the take-nothing judgment. der We need concert, McKinney’s Individually and in by the opine not on other issues raised information are insufficient to sources of we need not decide parties, and whether award in amount for dimi- support an temporary from environ- asserted nution in the 155.27-acre tract’s market perma- contamination constitutes mental claimed value attributable to nent damage. temporary environmental contamination. recovery McKinney’s Acres for diminu- invocation of a com-

Mel Ranch’s “sales (1) expert analysis short because parison” tion market value rests on the falls in subject not the of a McKinney. the Sebastian site was testimony appraiser Kathy 800, comparison purposes, true “sale” for 761 S.W.2d 801 (TexApp.-Houston writ)). 1988, comparable. site is not [1st Dist.] Sheridan no Auth. Guadalupe-Bianco See River v. McKinney pointed to the sale of the (“The (Tex.2002) Kraft, 77 S.W.3d site; trial, Sheridan as of the time of this when comparable sales method fails site was “under contract” “supposed not, comparison is made to sales that are $2,900 any day” close at a price sales ”). fact, .... comparable per approximately percent below acre— original $6,500 listing price per acre.2 The site the subject Sebastian was not The Sheridan site is not comparable be- of a for comparison purposes true “sale” cause it a significantly greater involved testimony because uncontroverted estab- degree of environmental contamination paid lished that for price the below-market than the contamination Mel Acres Ranch that result site in 19971 was the of a attributes to Houston Unlimited’s activi- “sweetheart deal.” This “sweetheart deal” ties. buyer between arranged and his former employer, Paper International is a designated Sheridan site federal Company, as a form of compensation site; Superfund Mel Acres Ranch is not. the buyer early in connection with the According to Houston apprais- Unlimited’s employment. termination of his expert, al who been “[had] familiar with the Sheridan for many years,” site Despite arrangement, McKinney this Sheridan site “was a permitted licensed or testified that the Sebastian site sale still disposal site took hazardous waste: could be as “an length considered arm’s PCBs, metals, organics.” volatile He stat- transaction” purposes. for valuation Ex- ed, “They closed this with a moni- cap and pert appraisal testimony nature of this is cost, tored years, the wells for 30 at a reliable, paid and the price sales for dollars, of between 16 17 million the Sebastian in a “sweetheart deal” site is McKinney dollars.” addressed this differ- not a valid for computing basis claimed testimony ence in her as follows: diminution in value of Mel Acres Ranch’s Well, Q. Okay. was not a 155.27-acre even if tract it is assumed that Superfund site, right? these two tracts had comparable levels of A. Correct. Reserve, contamination. Preston Cf. matter, Q. your analysis, Does it Bank, v. Compass L.L.C. 373 S.W.3d Superfund Mel Acres is not a site 663 (Tex.App.-Houston [14th Dist.] the extent of contamination? (“Actual no pet.) is evi- price sales sir, dence of fair market value circum- A. No it does not. And the reason not, stances indicate that the out of it sale is does whenever I look at the ordinary way.”) (citing some SPT Fed. Sheridan and then I at the site look Auction, Inc., Big site, Credit H they Union Auto Sebastian were two different *20 L.L.C., Reserve, McKinney buyer purchased 1. testified that the Preston 373 at 664 S.W.3d percent (" site for Sebastian "72 to 73 less long unaccept- 'Texas courts have held that properties selling than what other for in purchase property ed offers to are no evi- County Grimes at that time.” ”) (quot- property.’ dence of market value of Lee, 767, ing (Tex.App.- Lee v. S.W.3d 785 McKinney 2. testified verbal also that a offer of 2001, denied)); pet. Dist.] Houston see [14th $3,849 per had acre been extended for the Gulf, Ry. Fe Co. Hanks v. Colo. & Santa Sheridan site but was never reduced to writ- 311, 333, (1959). 159 Tex. S.W.2d 336-37 ing. Any offer no evidence such constitutes establish diminution of value. market Cf. contamination, duct, McKinney’s methodology sup- cannot en- two different types of jury’s award. very port similar tities, they showed a in market value. decrease reasons, respectfully these I dissent. For that McKin- testimony This demonstrates because she

ney’s is unreliable aby “sweet- price produced

used a sales the Sebastian site to involving

heart deal” Sheridan Su- her inclusion

bolster comparable sale. The

perfund site as lev- difference in contamination

significant the Sheridan site cannot be over- els at WATAUGA, Appellant, OF CITY upon price a sales differ- by relying come deal” ential attributable to a “sweetheart record, involving a different tract. On this GORDON, Appellee. Russell comparable is not to Mel the Sheridan site 02-12-00221-CV. No.

Acres Ranch. Texas, McKinney’s Appeals Court of remaining support computation Fort Worth. “before” and “after” consists she “a bunch” of of conversations had with Nov. marketplace” “in to “find out people ... properties what their feel was for

had environmental attached her

them.” This is not a reliable basis for

proffered expert opinion. See appraisal Homes,

Royce Humphrey, L.P. v. (Tex.App.-Beaumont 578-80 denied) opinion re- pet. (Appraiser’s

garding diminution in house’s market value ‘much stigma,

due to which was “based on

conversation, years particularly, over properties’

with these realtors sell selling experience

and on his with flooded

properties,” was unreliable and inadmissi- percent

ble establish 20 reduction in flood).

house’s market value attributable to McKinney I

Finally, note that did not any portion to attribute

“attempt any activity value ...

diminution in “attempt

Houston Unlimited” and did not

to calculate what amount of that diminu-

tion in value is due to activities not related ” .... if it assumed for Even

argument’s sake that Mel Acres Ranch

established a causal connection between *21 conduct and the harm

Houston Unlimited’s

Mel Acres Ranch attributes to that con-

Case Details

Case Name: Houston Unlimited, Inc. Metal Processing v. Mel Acres Ranch
Court Name: Court of Appeals of Texas
Date Published: Nov 15, 2012
Citation: 389 S.W.3d 583
Docket Number: 14-10-01006-CV
Court Abbreviation: Tex. App.
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