Opinion ID: 1224128
Heading Depth: 1
Heading Rank: 4

Heading: stigma damages

Text: In Walker Drug I, we held that the Walkers could recover damages for both permanent and temporary injury arising from defendants' trespass and nuisance if they could show that the alleged trespass and nuisance were continuing rather than permanent. See 902 P.2d at 1232-33. We also held that recovery would be limited to damage sustained during the three years prior to the filing of [the] complaint. Id. at 1232. On remand, the parties stipulated that the alleged trespass and nuisance were continuing in order to allow proof of damages during the first phase of the reverse bifurcated trial. On appeal, the Walkers contend that the trial court misinterpreted our limitation on recovery and required extraordinary proof that the continuing trespass or nuisance proximately caused the alleged damages. Indeed, with regard to stigma damages, the court excluded evidence from two witnesses showing a decrease in the market value of the Drugstore Property because, in its view, the witnesses could not demonstrate with sufficient precision that any decrease resulted during the limitations period. We conclude that, notwithstanding the standard of causation imposed by the trial court, [8] the court abused its discretion in excluding the testimony. We further conclude that the court articulated an inaccurate measure of stigma damages. Typically, the measure of damages in trespass and nuisance cases involving `permanent' [or indefinite] injury has been the diminished market value of the property, plus consequential losses to the use of the land or from discomfort or annoyance to the possessor. L. Neal Ellis, Jr., & Charles D. Case, Toxic Tort and Hazardous Substance Litigation § 6-5(a) (1995) [hereinafter Ellis & Case]. By contrast, damages from temporary injury, i.e., injury that is remediable, [9] typically include compensation for the cost of remediation or repair to the property or the property's diminished rental or use value during the period in which the injury persists, plus consequential damages. See id.; Dobbs § 5.4, at 336. Stigma damages are a facet of permanent damages, and recovery for stigma damages is compensation for a property's diminished market value in the absence of permanent `physical' harm. Ellis & Case § 6-5(b), at 156. This Court has not assessed the availability of stigma damages in any prior case. A majority of courts from other jurisdictions, however, allows recovery when a defendant's trespass or nuisance has caused some temporary physical injury to the property but, despite the temporary injury's remediation, the property's market value remains depressed. See id.; In re Paoli R.R. Yard PCB Litig., 35 F.3d 717, 797-98 (3d Cir.1994). Thus, stigma damages compensate for loss to the property's market value resulting from the long-term negative perception of the property in excess of any recovery obtained for the temporary injury itself. See id. Were this residual loss due to stigma not compensated, the plaintiff's property would be permanently deprived of significant value without compensation. [10] See id. We find the majority position convincing. Stigma damages are therefore recoverable in Utah when a plaintiff demonstrates that (1) defendants caused some temporary physical injury to plaintiffs land and (2) repair of this temporary injury will not return the value of the property to its prior level because of a lingering negative public perception. In this case, the Walkers seek stigma damages for an alleged decrease in the market value of the Drugstore Property. It was stipulated during the damages phase of trial that the Drugstore Property was contaminated by migrating gasoline from defendants' storage tanks and that this contamination was abatable. Thus, it was not disputed that a temporary injury was inflicted on the property. The Walkers then sought to prove at trial that the market value of the Drugstore Property was diminished by stigma notwithstanding remediation of the migrating gasoline and that the stigma arose or worsened during the three-year limitations period. To that end, they called two witnesses: an expert, Mr. David Van Drimmelen, to quantify the diminished market value, and a fact witness, Ms. Georgia Hamblin, to testify from her experience as a Moab real estate agent and appraiser that public perception of contaminated properties significantly worsened in Moab after March 1, 1990. The district court videotaped the testimony of both witnesses outside the jury's presence and concluded thereafter that Ms. Hamblin had not shown clearly enough that the Drugstore Property was stigmatized by adverse public perception during the limitations period. As a result, the court ruled that all evidence regarding stigma damages was inadmissible, and it excluded the testimony of both Mr. Van Drimmelen and Ms. Hamblin. It also directed a verdict with respect to stigma damages. We disagree with the trial court that Ms. Hamblin's testimony did not adequately state facts from which the jury could have found causation. In her testimony, Ms. Hamblin stated that she knew about the gasoline contamination of the Walkers' property during the 1980s and admitted it was likely that a well-informed buyer during that time period would also have known about the contamination. Nevertheless, she testified that public perception regarding the effect of environmental contamination on property values in Moab changed dramatically after March 1, 1990, the beginning of the limitations period in this case. In particular, she testified from her experience that buyers were much more sophisticated after 1990 about environmental contamination. They asked detailed questions about possible contamination and gave contamination more consideration in assessing value, whereas during the 1980s contamination was viewed as relatively unimportant. She also referred to regulatory changes occurring after 1990 that increased the effect of environmental contamination on property values. It was not until 1993 that real estate agents were required to disclose to prospective buyers land conditions that affected a property's environmental purity. While Ms. Hamblin did not testify about changes in public perception relating specifically to the Drugstore Property after 1990, it can clearly be inferred from her testimony that a potential buyer after March 1, 1990, would have viewed the contaminated property much more cautiously than would a buyer before then. This is true notwithstanding the undisputed fact, recognized by Ms. Hamblin, that overall contamination levels on the Drugstore Property had decreased since 1990. Because the Drugstore Property was not for sale during the relevant time period, no witness would likely have been able to testify, with the degree of specificity that the trial court apparently required, about the stigma attributed to the property by potential buyers. The fact that Ms. Hamblin could not precisely detail the amount by which stigma to the Drugstore Property allegedly arose or increased during the limitations period does not exclude her testimony. While evidence must provide a sufficient basis for estimating damages with reasonable certainty, we have held that evidence ... will be deemed sufficient to establish a basis for an award ... [when] the plaintiff has provided the best evidence available to him under the circumstances. Penelko, Inc. v. John Price Assoc., Inc., 642 P.2d 1229, 1232 (Utah 1982); see also Monter v. Kratzers Specialty Bread Co., 29 Utah 2d 18, 504 P.2d 40, 43 (1972) (stating that the difficulty of calculating damages does not prevent an injured party from recovery). Our review of the evidence confirms that Ms. Hamblin's testimony was the best evidence available for proving stigma damages given the circumstances. We therefore hold that Ms. Hamblin's testimony, and thus Mr. Van Drimelen's testimony, should have been admitted and that the issue of stigma damages should have been submitted to the jury. Having reached this conclusion, it is appropriate for the purpose of the remand to state some guidelines regarding the appropriate measure of stigma damages. As a general rule, damages for permanent injuries are measured by the difference between the value of the land before the harm [or at the beginning of the limitations period] and the value after the harm. Restatement (Second) of Torts § 929(1)(a) (1977). With respect to stigma damages, however, such a test may be inaccurate in that it does not acknowledge the role stigma damages plays in compensating the plaintiff for lost market value in excess of the cost of remediating a temporary injury to the property. When a permanent injury to property resulting from trespass or nuisance is physical, that injury cannot be repaired. Thus, the value of the injured property will not change after the injury is incurred, and it is accurate to assess damages by subtracting the value of the land at the date on which the complaint was filed from the land's value before the harm. When, however, physical injuries to the land are temporary, they are repairable by their nature. And when the injuries are repaired, value is restored to the injured property. Measuring damages only by reference to two dates at the outer boundaries of the events at issue does not account for the fluctuating value of such properties, and could leave the plaintiff uncompensated for repair costs incurred during the limitations period. Stigma damages, although permanent in nature, are recoverable in conjunction with, and measured against, these temporary damages. [11] Compensation is not by averages, and in this case, the level of pre-existing contamination is irrelevant to compensating the Walkers for market value they lost due to stigma after March 1, 1990. The Walkers are entitled to recover for all damage caused by new gasoline migrating onto the property during the limitations period, regardless of the existence of pre-existing contamination. Were it otherwise, the distinction between permanent and continuing trespass or nuisance we noted in Walker Drug I would be meaningless. The aim of compensation under trespass or nuisance should always be to compensate the plaintiff fully for injuries to the land or his use and enjoyment thereof caused by the defendant's actions. See Dobbs § 5.1, at 310-11. In sum, we conclude that Ms. Hamblin's testimony stated sufficient facts from which the jury could have found the requisite causal relationship between the alleged nuisance and trespass to the Drugstore Property and any stigma associated with the property. As a result, we hold that the trial court erred in refusing to allow Ms. Hamblin and Mr. Van Drimmelen to testify. We also hold that the court erred as a matter of law in directing the jury's verdict with respect to stigma damages.