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Adams v. Star Enter.

Citation: 25 ELR 21122
No. No. 94-1692, 51 F.3d 417/40 ERC 1513/(4th Cir., 04/06/1995)

The court holds that under Virginia law owners of land near an underground oil spill from an oil distribution facility may not recover damages for diminution in property value or fear of negative health effects. The court first holds that the owners may not recover under Virginia private nuisance law, because the oil spill is not visible or otherwise physically perceptible from the owners' properties. The owners' fears of health risks, future spread of the oil, and diminution in property value are speculative. The court next holds that even if the facility's negligence caused the oil spill, the owners may not recover under Virginia negligence law for their alleged fears of future harm and ill health effects because the oil spill did not physically impact their properties. Moreover, the damages for diminution in property value that the owners claim are purely economic losses and therefore are not compensable without a showing of a direct physical impact. The court also holds that the owners may not recover under the Virginia State Water Control Law, which imposes strict liability for discharges of oil into private and public lands, because "injury to property" does not include mere economic losses caused by the diminution in property value. Also, without demonstrating a physical impact on their properties, the owners have not shown that the facility was negligent.

Counsel for Appellants
David Machanic
Reed, Smith, Shaw & McClay
8251 Greensboro Dr., Ste. 1100, McLean VA 22102
(703) 734-4600

Counsel for Appellees
Richard E. Wallace Jr.
Howrey & Simon
1299 Pennsylvania Ave. NW, Washington DC 20004
(202) 783-0800

Before WILKINSON, Circuit Judge, PHILLIPS, Senior Circuit Judge, and LAY, Senior Circuit Judge of the United States Court of Appeals for the Eighth Circuit, sitting by designation.