In the

United States Court of Appeals

For the Seventh Circuit

No. 08-1924

BILLY J. CUNNINGHAM and MARY ANN CUNNINGHAM,

Plaintiffs-Appellants,

v.

MASTERWEAR CORPORATION, et al.,

Defendants-Appellees.

Appeal from the United States District Court

for the Southern District of Indiana, Indianapolis Division.

No. 1:04-CV-01616-LJM-WTL—Larry J. McKinney, Judge.

ARGUED OCTOBER 29, 2008—DECIDED JUNE 23, 2009

Before POSNER, MANION, and KANNE, Circuit Judges.

POSNER, Circuit Judge. The plaintiffs, a couple named

Cunningham, appeal from the dismissal, on the defendants’ motion for summary judgment, of a suit for

common law nuisance. Jurisdiction is founded on

diversity of citizenship. Indiana law would govern the

substantive issues if there were any—but the only issues

presented by the appeal are procedural.
2 No. 08-1924

From 1986 to the beginning of 2004, the plaintiffs operated a photographic studio in Martinsville, Indiana. The

studio was next door to a building that until 1991 had

contained a dry-cleaning business operated by defendant

Masterwear. (The other defendants are Masterwear’s

owners, and can be ignored.) In 1994 the plaintiffs began

living in the building that housed their studio. Soon

they began having severe headaches, plus a hacking

cough in the case of Mr. Cunningham and asthma in the

case of his wife. In December 2003, the EPA warned them

that their building contained perchloroethylene (PCE)

vapors in a concentration of 200 parts per billion and that

“this amount of the compound could be significant and

pose a health concern over the long term.” The vapors

were apparently the result of improper storage of chemicals by Masterwear. Upon receiving the letter the

plaintiffs moved out of the building and put it up for

sale. (It was sold the following year.) They claim not to

have had the symptoms of which they complain before

they lived in the building and that after they moved out

the symptoms diminished.

They seek damages both for the damage to their

health and for what they contend is the depressed price

at which they were forced to sell the property because of

its contamination. The district court granted summary

judgment for the defendants after disqualifying the plaintiffs’ expert medical witness under Fed. R. Evid. 702 and

ruling that the hearsay rule barred the plaintiffs from

testifying about the valuation of their property by appraisers.
No. 08-1924 3

When ruling on whether the plaintiffs’ medical expert,

Dr. D. Duane Houser, a physician who specializes in the

treatment of respiratory diseases, would be permitted to

testify about the cause of the symptoms about which

the plaintiffs complain, the judge had before him

Dr. Houser’s expert report plus deposition testimony.

From these materials and Houser’s curriculum vitae we

learn that he is an experienced physician who has never

however treated a respiratory illness caused or aggravated

by exposure to PCE. He has nevertheless formed the

definite opinion that all the symptoms of which the

plaintiffs complain were caused by that exposure. A

test of air samples in the plaintiffs’ home in 1996 found

that the air contained a level of PCE far above what the

Indiana environmental agency considers the safe level

of exposure to the chemical. (The plaintiffs say they

were not told the results of the study and that if they

had been told they would not have waited until 2004 to

move out.) The EPA found that the concentration of PCE

in the plaintiffs’ home in September 2003 was lower

than it had been in 1996; but it still was higher than

the Indiana agency considers safe. Apparently the EPA

has not made its own determination of what the maximum safe level is, beyond the warning in its letter to the

plaintiffs that “this amount of the compound [the amount

in their building] could be significant and pose a health

concern over the long term.”

Even if the plaintiffs were exposed to an unsafe level of

PCE, it would not follow that it was the cause of their

ailments. One would have to know what the specific

dangers were that had led the Indiana department to
4 No. 08-1924

pick the safe level it did; and about that, Houser’s report

and testimony are silent. Suppose that a concentration of

some chemical above a certain level has been found to

increase the incidence of birth defects, and as a result

that level is fixed as the maximum safe level of exposure

to the chemical; a person who was exposed to a higher

level of the chemical and developed asthma could not

attribute his ailment to his exposure.

Houser is not a toxicologist and did not present, either

directly or by citation to a scientific literature, a theory

that would link the level and duration of the exposure of

the plaintiffs to PCE to their symptoms. He did cite a

report by the United States Agency for Toxic Substances

and Disease Registry which states that “levels of 216 ppm

[parts per million] [of PCE] or more produce respiratory

tract irritation” and that headaches “have been observed

at exposures of 100 to 300 ppm.” But the plaintiffs were

exposed to only 200 parts per billion, which is only onefifth of one part per million. Moreover, the report lists

a variety of ailments unrelated to the plaintiffs’ ailments

that exposure to PCE can cause, and for all we know it

is those ailments that motivated Indiana’s selection of a

“safe” level of exposure. Houser thus presented no evidence from which a trier of fact could infer that the plaintiffs’ exposure to PCE is likely to have contributed significantly (or for that matter at all) to their ailments.

The alleged impairment of the value of the plaintiffs’

property presents a separate issue—contamination can

reduce property values without endangering anybody’s

health. But like the health issue, causation turns out to

be the plaintiffs’ Achilles heel.
No. 08-1924 5

Mr. Cunningham wanted to testify that the value of the

property had fallen from $135,000 to $105,000 (the price

at which it was sold) as a result of its contamination by

PCE; that $135,000 was the appraised value of the

building in 1999 and was the price at which he and his

wife listed it for sale when they moved out; that when

no offers materialized, their real estate agent explained

that prospective buyers were concerned about the building’s being contaminated; that he had convinced the

Cunninghams to lower the list price to $115,000; and that

after receiving two low offers they had finally sold the

property, after it had been on the market for more than

a year, for $105,000. The judge excluded all this testimony.

The testimony about what the real estate agent thought

the property worth and what prospective buyers had

told the agent would have been inadmissible hearsay. It

is true that Indiana law allows a property owner to

testify to the value of his property, provided that he can

offer some factual basis for his valuation; with that

proviso, it is regarded as a matter within his personal

knowledge. Crider & Crider, Inc. v. Downen, 873 N.E.2d

1115, 1120 (Ind. App. 2007); Court View Centre, L.L.C. v.

Witt, 753 N.E.2d 75, 82 (Ind. App. 2001); Jordan v. Talaga,

532 N.E.2d 1174, 1188 (Ind. App. 1989). And though, with

immaterial exceptions, evidentiary issues that arise in

cases litigated in federal courts are governed by the

Federal Rules of Evidence rather than by state rules of

evidence even when federal jurisdiction is based on

diversity of citizenship, e.g., Schindler v. Seiler, 474 F.3d

1008, 1010 (7th Cir. 2007), the federal rules, like Indiana’s

rules, have been interpreted to permit a property owner
6 No. 08-1924

to testify about the value of his property. He can testify

about it either as a matter within his personal knowledge,

United States v. Conn, 297 F.3d 548, 554 n. 2 (7th Cir.

2002); Christopher Phelps & Associates, LLC v. Galloway, 492

F.3d 532, 542 (4th Cir. 2007); Asplundh Mfg. Division v.

Benton Harbor Engineering, 57 F.3d 1190, 1197-98 (3d Cir.

1995), or, if he is an expert on property values, as an expert

witness, e.g., United States v. 68.94 Acres of Land, 918

F.2d 389, 397-98 (3d Cir. 1990); United States v. 10,031.98

Acres of Land, 850 F.2d 634, 636-37 (10th Cir. 1988)—which

Cunningham however was not.

What the owner is not allowed to do is merely repeat

another person’s valuation, United States v. 68.94 Acres

of Land, supra, 918 F.2d at 398, which was what

Cunningham wanted to do. Nor was what prospective

buyers told the real estate agent within Cunningham’s

personal knowledge. More important, he could not offer

a responsible opinion about the cause of a change in the

value of his property. Even if he knew its value at time x

and at time x + y, he had no basis for testifying to

what caused its value to fall. That would depend, at a

minimum, on whether the prices of comparable

properties had fallen by a comparable amount.

It does seem highly likely that the discovery of contamination would make the market value of a building fall,

though this is not certain because real estate prices might

be rising—in fact the plaintiffs sold the building during the

housing bubble of the early 2000s whose later bursting

plunged the economy into its present doldrums. Sold it,

as we know, for $105,000, but they had bought in back

in 1992 for only $50,000.
No. 08-1924 7

The critical question is how much they could have sold

the building for had it not been for the contamination.

Suppose that during the period in which the value of the

plaintiffs’ property fell by 22 percent (from $135,000 to

$105,000), it would have fallen by 12 percent had there

been no contamination; then only a 10 percent change in

the value of the property would be attributable to the

contamination. The plaintiffs needed evidence by a real

estate agent or real estate appraiser to establish the

effect of the contamination on the value of their property.

They did not attempt to present any such evidence.

In short, they failed to prove either personal injury or

property damage, and the district court was therefore

right to dismiss the case.

AFFIRMED.

6-23-09