Colorado Toxic Torts Lawyer & Attorney : Davis Graham & Stubbs Law Firm : Environmental Torts, Property Damage, Class Action

As is probably no surprise to lawyers and real estate professionals, a Pennsylvania appeals court held that title insurance does not protect a buyer from claims arising from the physical condition of the property such as later discovered environmental problems like asbestos, lead paint or abandoned septic tanks.  In Rood v. Commonwealth Land Title Ins. Co., 936 A.2d 488 (Pa. Super. 2007), a landowner made a claim against his title insurance company thirty five years after the policy had been issued, claiming that an abandoned septic tank discovered in his yard was a “defect” under the policy. Mr. Rood asserted that the presence of the tank made his title unmarketable because he would have to disclose the presence of the tank if he tried to sell his home under Pennsylvania’s Real Estate Sellers Disclosure Law and such a disclosure might cause a reduction in the price he was able to obtain. The trial court entered summary judgment in favor of the title company. 

The appellate court affirmed because title insurance insures only marketability of title. It cautioned title insurance policyholders not to confuse economic lack of marketability based on physical conditions possibly affecting property use with title marketability that relates solely to “defects affecting legally recognized rights and incidents of ownership.” 936 A.2d at 494.

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Often Daubert or similar motions are the key pre-trial motions in environmental toxic tort cases because exclusion of an expert, particularly the plaintiff’s causation or damages expert, provides the basis for a summary judgment in favor of the defendant. Player v. Motiva Enterprises, LLC. 240 Fed. Appx. 513 (3^rd Cir. 2007), is such a case. Plaintiffs owned or formerly owned 27 parcels of residential real estate in Gloucester Township, New Jersey. They claimed that leaks at a nearby gas station contaminated groundwater under their properties. Twenty six of the properties depended upon wells for drinking water. Of those properties, the wells on eighteen properties showed no contamination. Wells on the remaining eight properties showed some VOC contamination but the amounts detected were within the permissible range for drinking water under New Jersey’s ground water Quality Standards. 

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Often, plaintiffs in environmental toxic tort cases seek to recover property damages based on a theory that contamination or other environmental conditions have imposed a “stigma” on the property. Sometimes the property is itself contaminated or formerly contaminated. Other times the property is only in proximity to contamination or the other environmental condition.  The latter situation is often a difficult one for plaintiffs to convince courts to allow.

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In Friedland v. TIC - The Industrial Co., et al., Case No. 1:04-cv-01263-REB-KLM, slip opinion issued on January 18, 2008, the United States District Court for the District of Colorado joins two other federal district courts in refusing to allow a CERCLA potentially responsible party to collect response costs from other potentially responsible parties when those costs were paid by an environmental or other insurance policy. The other two courts are: the United States District Court for the District of Kansas (Raytheon Aircraft Co. v. United States, 2007 WL 4300221 at *4 (Dec. 8, 2007) ) and the United States District Court for the Eastern District of Texas (Vine Street, LLC v. Keeling ex. rel. Estate of Keeling, 460 F. Supp.2d 728, 765 (2006)).

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For a number of years, environmental toxic tort plaintiffs have sought to recover future medical monitoring expenses because of alleged exposures to chemicals even though they may not have any present physical injury. Appellate courts in several jurisdictions have recognized such claims. See, e.g., Potter v. Firestone Tire & Rubber Co., 863 P.2d 795 (Cal. 1993); Meyer v. Fluor Corp., 2007 WL 827762 (Missouri March 20, 2007); Redland Soccer Club Inc. v. Department of the Army, 696 A.2d 137 (Pa. 1997); Hansen v. Mountain Fuel Supply Co., 858 P.2d 970 (Utah 1993). However, appellate courts in other jurisdictions have declined to do so, holding that a present physical injury is a prerequisite. See, e.g., Paz v. Brush Engineered Materials, Inc., 2007 WL 14891 (Miss. Jan. 4, 2007); Henry v. Dow Chem. Co., 701 N.W.2d 684 (Mich. 2005); Hinton v. Monsanto Co., 813 So.2d 827 (Ala. 2001). Often, appellate courts state thatcreation of new causes of action is better left to the legislature. 

In December 2007, the North Carolina Court of Appeals issued a decision in Curl v. American Multimedia, Inc., 654 S.E.2d 76 (N.C. Ct. App. 2007), declining to recognize a medical monitoring claim in the absence of a present physical injury. The plaintiffs in Curl alleged that their drinking water wells were contaminated with trichloroethene and tetrachloroethene. Because of the exposures they had experienced, plaintiffs’ asserted that they were at increased risk of certain illnesses and therefore they needed to undergo periodic medical monitoring to ensure early detection of those illnesses. Plaintiffs had no present illnesses or other physical injuries. The court noted that, to allow such a claim to proceed, it would need to recognize a new cause of action. Because of the “complex policy questions” presented by plaintiffs’ request, and the need to “balanc[e] the humanitarian, environmental, and economic factors implicated,” the court determined that the question was better left to the legislature and not the courts. The court declined to create a new cause of action. 654 S.E.2d at 80-81.

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In Goodstein v. Continental Casualty Co., No. 05-35805, (9^th Cir. December 3, 2007), a property owner sought reimbursement under his Comprehensive General Liability policy for a discount he provided to purchasers of two contaminated Washington properties. The purchasers did not commit to clean up the properties on their own, but they did agree to be responsible for any cleanup that might be required in the future by government agencies or potential purchasers. Under Washington state law, if Mr. Goodstein had actually cleaned up the properties, his CGL policy would have covered the costs of those cleanups. However, the insurers rejected Mr. Goodstein’s assertion that the price discounts were the functional equivalent of cleanup costs and should be reimbursed under the CGL policy. Mr. Goodstein sued, asserting claims for breach of defense and indemnity duties under the policy. The trial court granted the insurers summary judgment on Mr. Goodstein’s claims. 

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Like prior cases, the most recently decided class certification opinions provide little consistent direction to litigants for framing future battles over class certification. The opinions do, however, reflect some of the difficulties inherent in class property damage claims.

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The United States District Court for Colorado held that used cooking oil and other nontoxic restaurant wastes are “pollutants” under the pollution exclusion clause in a restaurant owner’s commercial general liability policy. Mountain States Mutual Casualty Co. v. Kirkpatrick, 2007 WL 2506640 (D. Colo. Aug. 30, 2007).   The circumstances leading to this broad definition of “pollutant” began with two workers alleging that they were injured in October 2003 while cleaning sewers located near the Hog’s Breath Saloon & Restaurant in Otero County, Colorado. The workers claimed that Hog’s Breath discharged cooking oil, grease, fat and other food by-products directly into the sewer in violation of several city ordinances. The workers further claimed that nearly five feet of oil and grease had accumulated in the manhole closest to the Hog’s Breath sewer connection. The accumulation of oil and grease allegedly produced hydrogen sulfide gas that was trapped in the manhole and in air pockets within the grease. Both workers were overcome when sewer cleaning began. Both survived but then sued in state district court for among other things, negligence and negligence per se. 

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On January 7, 2008, following one of the longest jury trials ever held in Kansas, jurors in a class action property damage lawsuit returned a verdict in favor of defendants BP Corp. North America, Inc., BP America Inc., BP Products North America Inc., Atlantic Richfield Company and BP America Production Company. The litigation concerned a former Amoco oil refinery that operated in Neodesha, Kansas from 1897 until it was dismantled in 1970. Defendants had been conducting a cleanup of the site. Plaintiffs included the City of Neodesha, the local school district, several local businesses, and residents. The plaintiffs claimed that most of the town overlies groundwater contamination from the refinery consisting of petroleum hydrocarbons and metals such as arsenic, lead and mercury.   Plaintiffs’ claims included breach of contract and fraud as well as typical property tort claims. Property valuation experts were: Dr. Louis Wilde, LECG, for the defendants and Dr. John A. Kilpatrick, Greenfield Advisors, for the plaintiffs. 

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