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North Carolina Court of Appeals Caps UST Damages to Diminution in Property Value

Illustrating the limits on damages available to North Carolina landowners in toxic tort cases, the North Carolina Court of Appeals upheld a trial court’s order capping damages at the diminution in the value of the contaminated property.  BSK Enters., Inc. v. Beroth Oil Co., 783 S.E.2d 236 (N.C. Ct. App. 2016).

In a suit claiming nuisance, trespass, and violation of North Carolina’s Oil Pollution and Hazardous Substances Control Act, Plaintiffs alleged that Defendant’s leaking underground storage tanks contaminated the groundwater under Plaintiffs’ property, a commercial warehouse and distribution facility.  At trial the jury found that the contamination resulted in a $108,500 diminution in the value of Plaintiffs’ property.   The jury also awarded $1.5 million in reparation damages for the cost of remediating the groundwater beneath Plaintiffs’ property. The trial court, however, capped the damages at the diminished value of the property and refused to award reparation damages.

The Court of Appeals affirmed the trial court’s cap.  The Court held that where the cost to restore the property is disproportionate to or greatly exceeds the diminution in value of the property, the proper calculation for damages is merely the diminution of the property’s value. Id. at 249.  The Court noted the “personal use” exception to this doctrine, whereby a plaintiff may recover reparation damages in excess of the diminution of value if the plaintiff’s property has a personal use, such as a home.  Here, however, Plaintiffs were business entities that did not qualify for the exception. 

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About this Author

Anthony G. Papetti, Environmental Lawyer, Beveridge & Diamond Law Firm

Anthony Papetti maintains a general environmental litigation and regulatory practice, which has included  remediation matters under the Comprehensive Environmental Response, Compensation, and Liability Act (Superfund) and data compensation arbitration matters under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA).

Prior to law school, Anthony worked as a chemical analyst in the elemental analysis section of a global company that provides testing and inspection services for the petroleum, refining, and petrochemical industries....

Daniel M. Krainin, Environmental Attorney, Beveridge Diamond Law Firm

Daniel M. Krainin is a Principal in the New York office of Beveridge & Diamond, P.C.  He was named to the 2011 and 2012 Super Lawyers list for the New York Metropolitan area, holds an AV Preeminent Peer Review Rating from Martindale-Hubbell, and serves as a Vice Chair of the ABA Environment Section's Environmental Litigation and Toxic Torts Committee.

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Eric Klein, environmental attorney, Beveridge & Diamond, P.C.

Eric L. Klein is an environmental civil litigator and regulatory counselor in the Washington, D.C. office of Beveridge & Diamond, P.C.  He has handled cases in state and federal courts throughout the United States, litigating a variety of complex civil and commercial matters before juries, trial and appellate courts, arbitrators and administrative tribunals.  Mr. Klein frequently litigates both statutory and common law claims, and specializes in challenging and defending technical experts in the litigation of complex environmental torts.

Graham C. Zorn, Environmental Law Attorney, Beveridge Diamond Law Firm

Graham C. Zorn is an Associate in the Washington, D.C. office of Beveridge & Diamond, P.C., with a general litigation, regulatory, and environmental practice.  Graham has represented individual businesses, trade associations, and municipalities in compliance, enforcement, and counseling matters involving the Clean Air Act, the Clean Water Act, CERCLA and other state and federal statutes.  He has worked extensively on a series of complex products liability and toxic tort cases related to alleged groundwater contamination involving a gasoline additive.  Graham has also counseled domestic...