City of Chesapeake v. Cunningham

• Citation: 604 S.E.2d 420,268 Va. 624
• Decision Date: 05 November 2004
• Docket Number: Record No. 032974,Record No. 040002.
• Parties: CITY OF CHESAPEAKE v. Helen CUNNINGHAM Helen Cunningham v. City of Chesapeake.
• Court: Supreme Court of Virginia

604 S.E.2d 420

268 Va. 624

CITY OF CHESAPEAKE v. Helen CUNNINGHAM

Helen Cunningham v. City of Chesapeake.

Record Nos. 032974, 040002.

Supreme Court of Virginia.

November 5, 2004.

William F. Devine; Darlene P. Bradberry (Linda S. Laibstain; James A. Gorry, III; T. Jeffrey Salb; Ronald S. Hallman; Tracy E. Bilisoly; Williams Mullen Hofheimer Nusbaum; Breeden, Salb, Beasley & DuVall; Office of the City Attorney, on briefs), Norfolk, for appellant.

Gary A. Bryant (Louis N. Joynes, II; Willcox & Savage; Joynes & Gaidies Law Group, on brief), Norfolk, for appellee.

Virginia Municipal League; Local Government Attorneys of Virginia (Howard W. Dobbins; Elizabeth Mason Horsely; Williams Mullen, on brief), for amicus curiae in support of appellant.

Present: HASSELL, C.J., and LACY, KEENAN, KOONTZ, LEMONS, and AGEE, JJ., and COMPTON, S.J.

OPINION BY Justice G. STEVEN AGEE.

Helen Cunningham filed a thirteen-count motion for judgment against the City of Chesapeake ("the City") alleging that her August 30, 1998, miscarriage was caused by toxic water supplied by the City. Counts I through IX of the motion for judgment allege breach of contract, breach of warranty, battery, negligence, nuisance, trespass and violation of the Virginia Consumer Protection Act. Claims X through XIII allege claims of fraud. Cunningham claimed compensatory damages of $5,000,000 and punitive damages of $1,000,000.¹ In response, the City entered special pleas of sovereign immunity and the statute of limitations.

The trial court sustained the plea of the statute of limitations as to Counts I through IX and dismissed those claims with prejudice. The trial court overruled the plea as to Counts X through XIII, denied the City's claim of sovereign immunity, and refused to dismiss Cunningham's prayer for punitive damages. Pursuant to Code § 8.01-267.8(B), the trial court made the requisite findings enabling the parties to proceed with an interlocutory appeal of the trial court's judgment.

The City assigned error to the trial court's denial of its special pleas of sovereign immunity and the statute of limitations as well as the refusal to strike Cunningham's prayer for punitive damages. Cunningham assigned error to the dismissal of her non-fraud claims. We awarded the respective parties appeals as to all these issues and consolidated the cases for hearing.

I. BACKGROUND

Shortly after the City was formed in 1963, it commissioned engineering studies to find a reliable water source that would sustain future development. At that time, the City purchased most of its municipal water supply from the Cities of Norfolk and Portsmouth, which was expensive and potentially inadequate. This study recommended the Northwest River as a source of drinking water.

In May 1975, the U.S. Army Corps of Engineers granted the City a permit to withdraw water from the Northwest River and construct the Northwest River Treatment Plant ("the Plant"). The Plant was a conventional water treatment plant employing chlorine as a disinfectant, and its design was approved in 1977 by the Virginia Department of Health. The Plant supplies most of the City's municipal water.

While the Plant was typical of its era, the Northwest River was an atypical water source, with then undiscovered problems. The river has high organic carbon levels. When chlorine, a commonly used water purification chemical, is added it reacts with the naturally occurring organic matter in the water to form large amounts of trihalomethanes ("THMs"). At the time the Plant was designed, laboratory instrumentation to measure THMs was not in use, and THMs were not regulated contaminants.

In 1979, the Federal Safe Drinking Water Act, 42 U.S.C. §§ 300f et seq., required the Environmental Protection Agency (EPA) to publish a maximum contaminant level ("MCL") for each contaminant which "may have any adverse effect on the health of persons." 42 U.S.C. § 300g-1(b)(1)(A)(ii) (1976 & Supp. II 1979). THMs, the byproducts of water chlorination, were first identified for scientific analysis in 1974. National Primary Drinking Water Regulations; Disinfectants and Disinfection Byproducts, 63 Fed.Reg. 69,390, 69,394 (Dec. 16, 1998)(codified at 40 C.F.R. pts. 9, 141, and 142). In November 1979, the EPA set an annual average MCL for total trihalomethanes ("TTHMs")² of 0.10 mg/L or 100 parts per billion ("ppb"). National Interim Primary Drinking Water Regulations; Control of Trihalomethanes In Drinking Water, 44 Fed. Reg. 68,624, 68,624 (Nov. 29, 1979) (codified at 40 C.F.R. pt. 141). These new regulations became binding on the City in November of 1983. Id. (providing an effective date for the trihalomethane MCL of four years from November 29, 1979, for water systems such as the City's).

Shortly after the Plant came online in March of 1980, the City began sampling for THMs, finding levels that averaged between 200 and 350 ppb. The City retained Malcolm Pirnie, Inc., an environmental engineering consulting firm, to evaluate viable alternatives to reduce TTHM levels by the November 1983 regulatory effective date.

Malcolm Pirnie found that only two methods could effectively reduce THMs from the Northwest River water. The City adopted both of Malcolm Pirnie's proposed solutions: chlorine dioxide disinfection in the short term and air stripping towers in the long term.³ Chlorine dioxide replaced chlorine as a water treatment medium in August of 1983 and had the immediate effect of reducing TTHM levels within regulatory limits. The air stripping system began operation in May 1985. Despite constant monitoring and adjustment of the disinfectant and air stripping process, the Plant still periodically experienced high levels of THMs. In August 1985, the City began adding ammonia after the air stripping process. The ammonia combined with any free chlorine in the water supply in order to prevent the chlorine from reacting with organic material and forming THMs. This combined treatment process enabled the City to generally meet the recognized THM limit of 100 ppb.

In 1997, anticipating stricter regulatory limits on TTHMs of 80 ppb, the City determined to replace the air stripping towers with a reverse osmosis system. While the air strip system could meet the 100 ppb limit, the new limit was "unattainable" with that technology.

The reverse osmosis system could meet the new TTHM limits, but the construction to modify the Plant necessitated an interim period during which neither the air strip or reverse osmosis system would be in operation, but chlorine disinfection would continue. Concerned that high TTHM levels during this period would push annual averages over 100 ppb and put the City in violation of applicable regulations, the City petitioned the State Health Commissioner ("Commissioner") for a temporary exemption from the water quality regulations, particularly the TTHM limitations.⁴

On June 11, 1998, the Commissioner granted the City's petition for exemption. In granting the exemption, the Commissioner found ...

... [(1)] a compelling need for construction necessary to modify the Northwest River Water Treatment Plant and to improve the safety of the drinking water it produces ... [and (2)] the granting of an exemption to the TTHMs standard will not result in an unreasonable risk to the consumers' health.⁵

(Emphasis added).

In compliance with the exemption requirements, the City reported TTHM levels to the Virginia Department of Health ("VDH"), installed manganese contactors at the Plant to reduce TTHM levels, and posted public notice of the exemption in the Virginian-Pilot on July 9, 1998.⁶

The City began removing the air stripping towers at the Plant in preparation for the construction of the reverse osmosis system in February 1998. That same month, the Los Angeles Times reported that an unpublished study by the Reproductive Epidemiology Section of the California Department of Health Services ("the California study") found that daily consumption of more than five glasses of water with TTHM levels greater than 75 ppb increased the risk of spontaneous abortion for women in their first trimester of pregnancy. Within two months of receiving a copy of the California study, the City undertook an extensive campaign to inform the public of the possible risks to women, who might become or were pregnant, of the possible effects of consuming City water during the exemption period while the air stripping towers were removed and the reverse osmosis system was being constructed.

The City and the Chesapeake Department of Health ("CDH") issued three separate papers publicizing the water warnings: a Public Health Bulletin ("the Bulletin") on March 31, 1998, and a news release ("the News Release") and public notice ("the Notice") on April 1, 1998.

These warnings summarized the results of the California study, explained that the City's TTHM levels would temporarily spike while the air stripping towers were off-line, and gave instructions for precautions pregnant women should take in the interim period. These precautions included using primarily bottled water or boiling water before drinking. In addition, the City set up recorded messages with health risk information and reports of weekly TTHM levels on the City's Water Quality Hotline and Answerline, a CDH phone bank.

CDH faxed the Bulletin to Chesapeake obstetricians and gynecologists, family practitioners, internists, CDH Supervisors, City officials, the Chesapeake Public School Administration, newspapers, television and radio station news departments, Chesapeake General Hospital officials, Cox Communications and VDH officials. On March 31, 1998, CDH faxed a copy of the Bulletin to Cunningham's obstetrician, Dr. Timothy Hardy.

Media outlets provided extensive coverage of the water warnings. There were 22 television news reports between March 31, 1998 and May 4, 1998. The Virginian-Pilot included articles about the warning and Chesapeake's water quality 15 times from April 1 though ...