Opinion ID: 2165574
Heading Depth: 1
Heading Rank: 2

Heading: If the plaintiffs can prove a diminution in their property values due to an intentional trespass, do they have a right of recovery under Kentucky law?

Text: The second question certified to this Court, If the plaintiffs can prove a diminution in their property values due to an intentional trespass, do they have a right of recovery under Kentucky law? cannot be answered simply yes or no. The question confuses the right to recover with the measure of damages as a substitute for proof of actual harm. Kentucky law allows the recovery of just compensation (not merely nominal damages) upon proof of actual injury to the real estate. Hughett, 313 Ky. at 90, 230 S.W.2d at 96. Once the particular injury to real estate is shown, the diminution in fair market value is a recognized measure of damages. Ellison, 32 S.W.3d at 69; see also George v. Standard Slag Co., 431 S.W.2d 711, 712 (Ky.1968) (providing for a measure of damages). The preliminary question in a contamination case in Kentucky is at what level does the trespass evolve from a mere stigma, or damage to the reputation of the realty, into an actual injury or harm? See Morgan v. Hightower's Adm'r, 291 Ky. 58, 163 S.W.2d 21 (Ky.1942). The Hughett Court recognized that the courts of the country have differed on the question of what constitutes actual loss. . . . Id. at 90-91, 230 S.W.2d at 96. In Rockwell Int'l Corporation v. Wilhite, 143 S.W.3d 604 (Ky.App.2003), our Court of Appeals dealt with known deposits of polychlorinated biphenyls (PCBs) on some fifty-four tracts of land. The property owner's argument in Rockwell claimed harm to the land even though PCBs were invisible to the eye, odorless, and presented a progressive problem, much like the intentional trespass in our case. Although that case dealt with negligent trespass, the applicable statute of limitations, and the discovery rule, much of the court's discussion on actual injury or harm is relevant in the case sub judice for compensatory damages for intentional trespass and even nuisance cases. Citing this Court's earlier decision in Wilhite v. Rockwell International Corporation, 83 S.W.3d 516 (Ky.2002), and the evidence before the trial court, the appellate court noted that competent evidence of injury included the fact that PCB's were designated by Congress and the state of Kentucky as hazardous substances, that the EPA had made determinations of the concentrations which were unreasonably dangerous and carcinogenic, etc. Rockwell, 143 S.W.3d at 618. In rejecting the property owner's argument that any detectable quantity of PCB's provides sufficient proof of injury to support a claim for actual or compensatory damages, the Court of Appeals held that a decrease in the fair market value was not in itself a harm but a means of measuring the harm. Id. at 621. As to the level or concentration of PCB's that amount to a harm, the court noted that after a quarter of a century and a half of industrialization there is most likely no land in the continental United States that is completely free from one or more potentially toxic or harmful substances. . . . Id. The court opined that because [n]o persons who have come upon the land have been harmed, no farm animals or pets have been sickened, nor have any crops been lost and that [t]he land and the buildings thereon continue to be used as they were before the presence of PCBs was discovered, the landowners failed to establish injury or harm as a consequence of the trespass. Id. at 625. To reach the question posed, the Sixth Circuit must determine whether the contaminants in this case create an actual injuryan interference with an owner's use of the land. We know from Morgan, 291 Ky. at 60, 163 S.W.2d at 22-23, that mere damage to the reputation of realty does not entitle one to recovery, as that injury is more imaginary than real. Likewise, the mere presence of contaminants may only damage the property's reputation and not its use. The Court of Appeals in Rockwell, 143 S.W.3d at 604, set the bar for a compensable harm in negligent trespass cases to fall at the point where the contaminants cause a health hazard. Relying on our rationale in Wood v. Wyeth-Ayerst Laboratories, 82 S.W.3d 849 (Ky. 2002), a products liability case with a question as to harm to the person, the Rockwell court reasoned that the mere presence of PCB's itself was not an injury, that some physical harm needed to be shown. Id. at 623. This Court is not as forgiving in identifying actual injury to real property, whether by intentional or negligent trespass. When the intrusion is through imperceptible particles not visible to the naked eye, there may still be an actual injury. In Commonwealth ex rel. Dep't of Natural Res. v. Stephens, 539 S.W.2d 303, 305 (Ky.1976), a takings case, the Court recognized damages for interfering with a property's use where no physical injury existed to the property (the owner was prohibited from certain uses of his property). And in George and Anderson, nuisance cases, the court allowed damages for interfering with the use and enjoyment of property without a physical intrusion. George, 431 S.W.2d at 711; Ky. & W. Va. Power Co. v. Anderson, 288 Ky. 501, 156 S.W.2d 857 (1941). Property owners are not required to prove contamination that is an actual or verifiable health risk, nor are they required to wait until government action is taken. An intrusion (or encroachment) which is an unreasonable interference with the property owner's possessory use of his/her property is sufficient evidence of an actual injury (or damage to the property) to award actual damages. When the parcel's groundwater is contaminated, whether by imperceptible particles or visible particles, to the extent that it cannot be used for consumption by humans, animals, or crops, there is an actual injury. When ponds and streams have to have signs posted to prevent swimming, fishing, drinking, or other otherwise normal uses, there is an unreasonable interference with one's use and enjoyment. The amount of harm, if any, to the individual parcels, and the corresponding measure of actual or compensatory damages will depend upon the proof introduced at trialan issue of fact. Ellison, 32 S.W.3d at 70. To the extent that the property owners prove actual or compensatory damages for the harm (the cost of restoring the property to the pre-trespass condition), the amount by which the injury to the property diminishes its total value operates as an upper limit on any damage recovery. Id. Thus, the diminution in the property's value due to an intentional trespass is a recognized measure of damages after, or if, an actual injury has been found. The law of Kentucky is hereby certified to the United States Court of Appeals for the Sixth Circuit. All sitting. MCANULTY, NOBLE, and SCOTT, JJ., concur. CUNNINGHAM, J., dissents by separate opinion. MINTON, J., dissents by separate opinion in which LAMBERT, C.J., joins.