In their complaint plaintiffs claimed their property was "unusable and extremely difficult to market for an indefinite period of time." They claimed there was little likelihood the property "will ever be as valuable as it would have been if not contaminated." In the prayer of the complaint plaintiffs sought the diminution in market value of their respective properties as damages. (Mangini I, supra, 230 Cal.App.3d 1125, 1145.) The Court of Appeal agreed with the defendant this type of damage award would not be available under a continuing trespass theory and noted, "[t]his form of relief is incompatible with a claim based on injuries caused by continuing nuisance. [Citations.]" (Ibid.)
In CAMSI IV v. Hunter Technology Corp. (1991) 230 Cal.App.3d 1525 [282 Cal.Rptr. 80], the appellate court considered a landowner's claims for negligence, negligence per se and strict liability against a former lessee of the property, which had allegedly contaminated the property during its leasehold. The Court of Appeal affirmed the trial court's decision to sustain the defendant's demurrer without leave to amend, noting that the claims were time-barred.
During oral argument, plaintiff's counsel confirmed his client did not intend to bring a cause of action for nuisance. (CAMSI IV v. Hunter Technology Corp., supra, 230 Cal.App.3d at p. 1539.) After the court issued its pinion, the Court of Appeal issued its decision in Mangini I. Based on this new authority, plaintiff petitioned for rehearing, arguing the trial court abused its discretion by denying it leave to amend to plead theories of continuing trespass and continuing nuisance. The appellate court denied the petition and in its order stated: "For reasons well explained in Mangini, CAMSI IV could have avoided the bar of the statute of limitations only by pleading continuing nuisance and continuing trespass, but had it done so it would have limited its available relief in damages to harms shown to have accrued before its action was filed (which would not have included, for example, diminution in market value of the parcel.)" (CAMSI IV v. Hunter Technology Corp., supra, 230 Cal.App.3d at p. 1542, italics omitted.)
The foregoing authorities are representative of the decisions holding California law does not allow future or prospective damages, including diminution in value damages, in a continuing nuisance case. (See also Capogeannis v. Superior Court (1993) 12 Cal.App.4th 668, 679 [15 Cal.Rptr.2d 796] [recovery of future damages would be inconsistent with a theory of continuing nuisance]; Alexander v. McKnight (1992) 7 Cal.App.4th 973, 978 [9 Cal.Rptr.2d 453] [equitable relief ordering abatement plus an award of damages for future harm would unjustly enrich the plaintiffs]; Mozzetti v. City of Brisbane (1977) 67 Cal.App.3d 565, 575-576 [136 Cal.Rptr. 751] [instruction on damages improperly allowed plaintiffs to receive damages for both the cost of remediation and the decrease in property value]; Rhodes v. San Mateo Investment Co. (1955) 130 Cal.App.2d 116, 118 [278 P.2d 447] [damages for depreciation in market value could not be allowed where court had issued injunction ordering the defendant to abate the nuisance]; see also 6 Witkin, Summary of Cal. Law, supra, Torts, s 1472, pp. 941-943 [to have the cause of depreciation removed and at the same time receive damages for the depreciation would amount to double recovery]; 9 Miller & Starr, Cal. Real Estate (2d ed. 1990) Landowners' Liability, s 29:12, p. 85 [with a continuing nuisance a plaintiff can recover past and present damages, but not future damages, since the abatement order will terminate the nuisance for the future].)
Appellants acknowledge the current state of California law. However they claim the concept property reverts to its precontamination value once the contamination is remediated does not conform to market realities. They claim remediation may take as long as 20 years, or more in some cases. In these situations it is difficult, if not impossible, to sell or secure a loan against the land due to the stigma which attaches to previously contaminated property. They argue this prevents a land speculator or investor from realizing his or her profit, and, because investment moneys are locked up in the contaminated property, prevents such persons from using that investment money for other projects. Appellants therefore request this court to "overrule" existing law and allow "stigma" damages as a proper remedy for a continuing nuisance caused by chemical pollution of the land.
We acknowledge the logic and general appeal of this argument in the context of contamination from extensive toxic or hazardous waste. However, this court does not write on a clean slate. As an intermediate appellate court we are bound to follow and apply the decisions of our highest court, which expressly disallow prospective damages in cases of continuing nuisance. [FN 3] (Spaulding v. Cameron, supra, 38 Cal.2d 265; Auto Equity Sales, Inc. v. Superior Court, supra, 57 Cal.2d 450, 455.) Accordingly, we reject appellants' request to create new law to permit recovery of diminution in value damages in a continuing nuisance case.
Appellants claim courts of other jurisdictions have been moving ahead of California in the area of toxic tort damages. They claim some jurisdictions acknowledge injury to land from toxic or hazardous materials does not fit neatly into a category as either a permanent or temporary nuisance. Appellants claim these jurisdictions recognize the contamination may continue for an indefinite period despite aggressive remediation efforts. They point out these courts would likely permit "stigma" damages as a component of the diminution in value of the land caused by the contamination, whether or not complete remediation is feasible in the immediate future.
Both sides cite the decision in F.D.I.C. v. Jackson-Shaw Partners No. 46 Ltd. (N.D.Cal. 1994) 850 F.Supp. 839 as supporting their position. ARCO points out the decision applies California law and denies diminution in value damages in a continuing nuisance case. Appellants claim the decision suggests "stigma" damages may nevertheless be appropriate in a permanent nuisance case.
In F.D.I.C. v. Jackson-Shaw Partners No. 46 Ltd., supra, 850 F.Supp. 839 a partnership borrowed $20 million to acquire and construct a commercial development on a 20-acre parcel of land in San Jose. The loan was secured by a deed of trust on the property. The partnership later discovered releases of hazardous substances from two adjacent sites had contaminated the soil and ground water beneath a portion of its property. The owners of the adjacent properties, Chevron and Solvent Service Company, Inc. (SSI), agreed to clean up the site and to indemnify the partnership for liabilities which arose out of the contamination. Experts predicted it would take at least 20 years to restore the property to its precontamination condition.
The partnership was unable to repay the loan and the Federal Deposit Insurance Corporation (FDIC) brought suit. The partnership cross-complained against Chevron and SSI for permanent trespass and nuisance. When the partnership realized those causes of action were barred by the statute of limitations, it filed an amended cross-complaint for continuing trespass and continuing nuisance seeking diminution in value damages.
Chevron and SSI brought a motion to dismiss, contending diminution in value damages were not available for a continuing nuisance claim. The district court analyzed California law and concluded the nuisance and trespass claims should be dismissed because "... California courts which have spoken in this area are uniformly of the view that diminution in value damages are not compensable in a continuing trespass or nuisance case. ..." (850 F.Supp. at p. 843.)
The partnership attempted to distinguish the decisions in Spaulding, Mangini I, and CAMSI IV. The partnership argued its damages were not prospective. Because of the contamination it was unable to sell the property and it lost an opportunity to escape a deficiency judgment as well. The partnership also claimed the parcel will never revert to its fair market value because of the stigma which attaches to property with a history of contamination. Finally, the partnership argued California courts are flexible in determining damages for injury to property and adopt whatever formula will most adequately compensate the injured party for the loss it sustained. (850 F.Supp. at p. 843.)
In rejecting the partnership's arguments the district court noted diminution in value damages, caused by stigma associated with a property with a history of contamination, would likely have been recoverable had its claim for permanent trespass and nuisance not been barred by the statute of limitations. (850 F.Supp. at p. 844.) "Although it is axiomatic that a tortfeasor is liable for all damages proximately caused by his or her conduct [citations], an injured party's claim is barred if it is not filed within the applicable limitations period. [The partnership] has already admitted that its claims for permanent nuisance and permanent trespass are barred by the statute of limitations. Were they not barred, the partnership would, in all likelihood be able to recover diminution in value damages, [citations], which might include a component relating to the stigma caused by the contamination, although this remains an open question. [Citations.] As the discussion above reveals, the weight of California courts which have spoken to this issue have rejected attempts to recover such damages under continuing trespass or continuing nuisance theories. It is easy to see why. The principal assumption underlying continuing trespass and continuing nuisance theories is that the activity causing the injury can be abated. Thus, the damages are distinct from those arising from conduct constituting permanent trespass and permanent nuisance. To accept [the partnership's] reasoning would permit parties seeking recovery for time-barred permanent trespass and permanent nuisance claims to avoid the statute of limitations simply by recharacterizing them as continuing trespass and continuing nuisance claims. The Court cannot permit the statute of limitations to be eviscerated in this fashion.
"California law limits damages for continuing trespass and continuing nuisance to abatement and loss of use. SSI and Chevron have agreed to indemnify [the partnership] for remediation costs and Wallace Murfit has admitted that the partnership has suffered no loss of use damages." (850 F.Supp. at p. 844, fn. omitted.) Accordingly, the district court dismissed the partnership's claims for continuing nuisance and trespass. (Ibid.)
Appellants also cite in support of their argument the Iowa Supreme court decision in Mel Foster Co. Prop., Inc. v. American Oil Co. (Iowa 1988) 427 N.W.2d 171. In Mel Foster the Supreme Court of Iowa held nuisance actions for land contaminated by chemical pollutants should be classified as permanent nuisances so as to entitle the landowner to diminution in market value damages.
In Mel Foster a property owner's land was contaminated by gasoline which had leaked from an underground gasoline tank on an adjacent property owned by U-Haul and from a distribution line from a nearby gasoline station owned by Amoco. U-Haul and Amoco immediately took steps to clean up the gasoline leaks. The landowner brought suit against U-Haul and Amoco on a variety of theories. The case was tried to the jury on a nuisance theory. The trial court ruled the nuisance was temporary and the landowner could bring successive suits to recover damages for lost rents until the nuisance was fully abated. The trial court instructed the jury the proper measure of damages was the reduction of reasonable rental value of the property caused by the nuisance measured from discovery of the gasoline leak to the time of trial. The jury found for the landowner and awarded $188,000 in damages.
On appeal the parties disputed whether the nuisance was properly classified as temporary. The Supreme Court of Iowa acknowledged "[u]nderground gasoline contamination does not fit neatly into a category as either a temporary or permanent nuisance. Case law concerning temporary nuisances often deals with the type of interference with the use of property which is abated when the cause of the nuisance has abated. [Citations.] These cases, which address an interference with the use of property but do not encompass injury to the property itself, are not instructive in dealing with chemical pollution to real estate which will remain in the soil for an indefinite period of time. In McGill v. Pintsch Compressing Co., 140 Iowa 429, 435, 118 N.W. 786, 789 (1908), this court stated: [P] [']In such a case [temporary nuisance], in the absence of injury to the property itself, the measure of damages is the diminution in the rental value caused by the maintenance of the nuisance.['] Id. (emphasis added [by court]).
"Other cases suggest that if a nuisance causes damage which will be presented for an indefinite period of time, that nuisance should be considered permanent. See Ryan v. City of Emmetsburg, 232 Iowa 600, 608, 4 N.W.2d 435, 441 (1942) ('it may be said that a permanent nuisance is one of such character and existing under such circumstances that it will be reasonably certain to continue indefinitely into the future'); see also Hudson v. Peavy Oil Co., 279 Or. 3, 10, 566 P.2d 175, 179 (1977) (permanent in the sense that injury was likely to persist for an undetermined but significant period of time); Mikol v. Vlahopoulos, 86 Ariz. 93, 94, 340 P.2d 1000, 1001 (1959) (nuisance considered permanent if it 'will remain even though the cause has been abated'). The case of Danciger Oil & Refining Company v. Donahey, 205 Okla. 390, 238 P.2d 308 (1951), correctly states the context in which the word 'permanent' must be understood: [P] [']The word "permanent" in a legal sense is not equivalent to perpetual, or unending, or unchangeable. Permanency, in a legal acceptation of the term, does not mean forever-indefinitely long is sufficient.['] Id. at 394, 238 P.2d at 312; see also Sinclair Refining Co. v. Bennett, 123 F.2d 884, 886-87; Note, Stream Pollution -- Recovery of Damages, 50 Iowa L.Rev. 141, 152 (1964).
"Chemical contamination of land, such as the gasoline on Foster's property, encompasses aspects of both a temporary and permanent nuisance. This injury is temporary in the sense that the cause of the pollution has been discovered and abated, and the harmful chemicals in the ground will eventually dissipate. This nuisance is permanent in the sense that it constitutes damage to the ground itself and will continue for an indefinite but significant period of time. An attempt to classify chemical pollution as a permanent or temporary nuisance is further complicated by the presence of rapidly changing scientific technology. Scientific knowledge enables society to successfully clean up pollution once thought to be permanent; it also reveals hidden dangers in chemicals once thought to be safe....
"When a nuisance results in contamination of property for an indefinite period of time, the proper measure of damages is the diminution of the market value of the property. This measure of damages is proper even when the source of the contamination has been abated [in this case tanks and distribution lines removed]. Permanent damages may be awarded even if the nuisance is classified as temporary. See Stockdale v. Agrico Chemical Co., Division of Continental Oil Co., 340 F.Supp. 244, 270 (N.D.Iowa 1972) ('It is said that there is no direct relationship between the classification of the nuisance and the classification of the injury .... It is possible for a temporary nuisance to result in permanent or temporary damages or both.') ... Cases from other jurisdictions support the award of permanent damages in this case. See, e.g., Sinclair Refining Co. v. Bennett, 123 F.2d 884, 886-87 (6th Cir. 1941) (gasoline contamination of wells resulted in permanent damages even though contamination would dissipate over time); Idaho Gold Dredging Corp. v. Boise Payette Lumber Co., 52 Idaho 766, 22 P.2d 147 (1933) (grease and oil contamination of minefields results in permanent damages); Sunray DX Oil Co. v. Brown, 477 P.2d 67, 69 (Okla.1970) (permanent damage to realty can result from a temporary and abatable nuisance); Danciger Oil & Refining Co. v. Donahey, 205 Okla. 390, 393-94, 238 P.2d 308, 312 (1951) (permanent damages awarded for chemical contamination which will dissipate after several years); Lytle v. Payette-Oregon Slope Irrigation Dist., 175 Or. 276, 288, 152 P.2d 934, 939 (1944) (infestation of property with noxious weeds justified award of permanent damages); Gross v. Connecticut Mut. Life Ins. Co. 361 N.W.2d 259, 272-73 (S.D.1985) (injury which reduces the productivity of land justifies award of diminution of market value to the land); St. Louis Southwestern Ry. Co. v. Denton, 288 S.W. 476, 477 (Tex.Civ.App.1926); Akers v. Ashland Oil & Refining Co., 139 W.Va. 682, 691, 80 S.E.2d 884, 888-89 (1954) (even though oil contamination would eventually leave the ground, award of permanent damages is appropriate).
"The award of permanent damages based on the reduction of market value provides that the plaintiff's remedies stemming from this particular incident will be addressed in one legal action. Successive actions to recover temporary damages stemming from one incident, such as the action currently filed by Foster, are contrary to the goal of efficient legal remedies....
"We conclude the proper measure of damages in this nuisance case is the difference between the market value of Foster's property immediately before contamination and the market value of that property after the contamination...." (Mel Foster Co. Prop. v. American Oil Co., supra, 427 N.W.2d 171, 174-176.)
The decision in Mel Foster makes a very strong argument for classifying injuries to land from contamination by toxics or hazardous materials as permanent nuisances. The decision also provides a cogent and compelling rationale for classifying these nuisances as permanent in every case. It is cumbersome, inefficient and contrary to the goal of efficient legal remedies to bring numerous and successive suits during the period the land remains contaminated despite remediation efforts. The Mel Foster court holds the better approach is to treat these cases as permanent nuisances so as to determine all damages, including diminution in value damages, once for all past, present and future harm in one action, even though the nuisance may be abated at some indefinite point in the future.
Nevertheless, the Mel Foster decision does not aid appellants. It does not support their argument diminution in value damages should be allowed in each of several potential successive suits on a claim for a temporary and continuing nuisance, as in this case. The Mel Foster decision reinforces the view it would have been to appellants' advantage to have pursued causes of action against ARCO for permanent trespass and permanent nuisance. However, appellants' claims for permanent trespass and nuisance were barred by the statute of limitations. Nor does the Mel Foster decision aid appellants to the extent it permitted diminution in value damages because it did not specifically consider whether "stigma" from the contamination played any role in the landowner's loss of either the use or enjoyment of his land. (Cf. In re Tutu Wells Contamination Litigation v. Texaco Inc. (D.V.I. 1995) 909 F.Supp. 991, 996, fn. 10 [describing an argument for decline in market value as an element of lost use and enjoyment of land as "controversial"]; but see Adkins v. Thomas Solvent Co. (1992) 440 Mich. 293 [487 N.W.2d 715, 721] [diminution of market value alone does not constitute an interference with the use or enjoyment of land giving rise to a claim for nuisance]; see generally, Cabot, Post-Remediation 'Stigma' Damages Hinge on Hard Evidence of Residual Risk, 8 Inside Litigation No. 9 (Oct. 1994) p. 27.)
However, claims for stigma damages are beginning to arise in cases throughout the nation in toxic contamination cases. Decisions from courts which have entertained such claims appear to suggest stigma damages could be a proper element of damages in cases presenting substantial evidence the property suffers permanent physical injury despite remediation efforts. (See F.D.I.C. v. Jackson-Shaw Partners No. 46 Ltd., supra, 850 F.Supp. 839.) However, some courts have been reluctant to entertain such claims due to the amorphous nature of public fears of contaminated land and the inherent uncertainty and speculativeness of the extent, as well as the existence, of the stigma. At least one court has suggested owners of contaminated land could not recover damages for diminution in market value caused by stigma absent proof (1) their land suffered physical injury from the contamination, (2) remediation would not restore market value to a precontamination level, and (3) the contamination presented an ongoing risk to their land. (See In re Paoli Railroad Yard PCB Litigation (3d Cir. 1994) 35 F.3d 717, 795-798.)
On the other hand, courts have uniformly rejected claims of stigma damages absent evidence the plaintiff's own property suffered physical injury from the contamination. (See, e.g., Adkins v. Thomas Solvent Co., supra 440 Mich. 293 [487 N.W.2d 715, 721]; Adams v. Star Enterprise (4th Cir. 1995) 51 F.3d 417, 423; Berry v. Armstrong Rubber Co. (5th Cir. 1993) 989 F.2d 822, 829; Leaf River Forest Products, Inc. v. Ferguson (Miss. 1995) 662 So.2d 648, 662-665; O'Neal v. Department of Army (M.D.Pa. 1994) 852 F.Supp. 327, 336-337; In re Paoli Railroad Yard PCB Litigation, supra, 35 F.3d 717, 795-798.)
In this case appellants concede they have not suffered any costs of remediation or loss of use or enjoyment of their property. Appellants do not contend the nuisance was permanent, of indefinite duration or posed a threat of future injury. No case of which we are aware permits a plaintiff to recover diminution in market value damages caused by the stigma of contaminated land in this context, where the landowners claim the nuisance was abatable and temporary, rather than permanent or indefinite.
This may appear to be a harsh result. However, we are bound by the confluence of California law regarding recoverable damages in an action for continuing nuisance and appellants' failure to bring suit for permanent nuisance or permanent trespass within the statutory period. These circumstances combine to prevent appellants from receiving the damages they seek despite the possibility appellants' land may continue to suffer from stigma due to its history of contamination.
The judgment is affirmed. Respondents to recover their costs of appeal.
Lillie, P. J., and Woods, J., concurred.
Appellants' petition for review by the Supreme Court was denied October 2, 1996.