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BSK Enterprises, Inc. v. Beroth Oil Co.

ELR Citation: 46 ELR 20048
Nos. COA15-189, (N.C. App. Ct., 03/01/2016)

A North Carolina appellate court upheld a trial court's decision to cap a property owner's award of remediation damages to the diminution in property value, not the amount it would cost to clean up the property, thereby reducing a jury's award from $1.5 million to $108,500. The case involves a property owner who filed suit against its neighbor for groundwater contamination stemming from a UST leak. The neighbor has been actively working to remediate the migration of contamination through the implementation of a state-approved corrective action plan. But the state agency chose not to prepare a corrective action plan for the plaintiff's property because addressing the source area on defendant's property would have the biggest impact on the dissolved phase plume on the plaintiff's property and was the typical approach for groundwater cleanups in North Carolina. At trial, the jury awarded remediation damages for the full amount it would take to clean the property, but the trial judge capped the damages to the diminution in value of the property caused by the contamination. On appeal, the owner argued that limiting damages to the diminution of the market value would essentially permit a defendant to contaminate a neighbor at will and without limitation as long as the defendant is willing to pay for the reduction in value caused by the contamination. But under the facts of this case, the appellate court agreed with the trial court that where, as here, the cost of remediation greatly exceeds or is disproportionate to the diminution in value of property, the measure of damages should be the diminution in value caused by the contamination.