Court Opinion

ID: 3003199
Source: CourtListenerOpinion
Date Created: 2015-09-24 20:40:20.224272+00
Date Added: 2024-06-11T15:03:17.285863
License: Public Domain

In the

United States Court of Appeals
               For the Seventh Circuit

No. 08-1924

B ILLY J. C UNNINGHAM and M ARY A NN C UNNINGHAM,

                                              Plaintiffs-Appellants,
                                 v.

M ASTERWEAR C ORPORATION, 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.

     A RGUED O CTOBER 29, 2008—D ECIDED JUNE 23, 2009

 Before P OSNER, M ANION, and K ANNE, Circuit Judges.
  P OSNER, Circuit Judge. The plaintiffs, a couple named
Cunningham, appeal from the dismissal, on the defen-
dants’ 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 oper-
ated 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 chemi-
cals 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 plain-
tiffs’ 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 ap-
praisers.
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 maxi-
mum 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 one-
fifth 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 evi-
dence from which a trier of fact could infer that the plain-
tiffs’ exposure to PCE is likely to have contributed sig-
nificantly (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 build-
ing’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 contami-
nation 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.
                                                A FFIRMED.

                          6-23-09