UPDATE: Property Damage Claims Even After Cleanup Under Massachusetts General Laws Chap. 21E
In 2018 I commented on this blog about an opinion of the Massachusetts Supreme Judicial Court concerning a claim by the developer of a condominium development against the City of Lowell whose operation of a landfill on the property had caused contamination. Grand Manor Condominium Ass’n v. City of Lowell, 88 N.E.3d 1154 (Mass. 2018). The Court reiterated the rule that the Massachusetts Oil and Hazardous Material Release Prevention Act, commonly known as “Chapter 21E,” authorizes a private claim for diminution in a property’s value as the result of a release of hazardous material, but only if a cleanup under Chapter 21E will not restore the property’s value.
Grand Manor was remanded for a new trial. This week, the Massachusetts Appeals Court decided an appeal from that second trial. Grand Manor Condominium Ass’n v. City of Lowell, No. 20-P-622 (Mass. App. Ct. Mar. 17, 2022). The defendant had capped the landfill, which constituted an adequate cleanup, and had imposed an Activity and Use Limitation, essentially a restrictive covenant to preserve the cap and to protect against further exposure. The condominium had 36 units, of which 12 had been sold by the plaintiff; accordingly, damages for each unit differed between the retained and sold units.
Plaintiff’s expert estimated permanent loss in value of about $2.7 million. Defendant’s expert opined that the property experienced a loss of about $3.1 million, but that the condominium would recover its full value within two years; were he believed, the plaintiff would not have been entitled to damages at all. The jury awarded about $1.4 million. To that the court added prejudgment interest at 12% and attorneys’ fees of about $1.1 million.
The Appeals Court affirmed on a variety of issues. Of particular interest, it held that plaintiff’s valuation expert could properly testify that no comparable sales existed because he could not locate any comparable condominium development originally constructed on contaminated property. Defendant’s valuation expert used comparables that were contaminated after construction. The Appeals Court also affirmed the attorneys’ fees and prejudgment interest.
This claim in Massachusetts was statutory. So too was the state restoration claim allowed in Atlantic Richfield Co. v. Christian, 140 S. Ct. 1335 (2020), discussed in April 2020 on this blog. But note that in W. Va. State Univ. v. Dow Chem. Co., No. 20-1712 (4th Cir. Jan. 10, 2022), discussed here, the plaintiff university asserted a common law state tort claim to recover damages from contamination and imposition of a restrictive covenant. We have had relatively recent experience with a property damage recovery by an underflowed property owner even though the contamination was addressed by a voluntary response under state law. Tri-Realty Co. v. Ursinus College, No. 11-05885-GP (E.D. Pa. consent decree entered Sept. 25, 2017, arbitration award Apr. 24, 2018). The possibility of these kinds of claims should not be ignored by either potential plaintiffs or remediators.