Mehlenbacher v. Akzo Nobel Salt, Inc., 94-CV-6343L.

• Decision Date: 28 September 1999
• Docket Number: No. 95-CV-6247L.,No. 94-CV-6343L.,94-CV-6343L.,95-CV-6247L.
• Citation: 71 F.Supp.2d 179
• Parties: Terry MEHLENBACHER, et al., Plaintiff, v. AKZO NOBEL SALT, INC., Defendant. Integrated Waste Services, Inc., Plaintiff, v. Akzo Nobel Salt, Inc., Defendant.
• Court: U.S. District Court — Western District of New York

71 F.Supp.2d 179

Terry MEHLENBACHER, et al., Plaintiff, v. AKZO NOBEL SALT, INC., Defendant.

Integrated Waste Services, Inc., Plaintiff, v. Akzo Nobel Salt, Inc., Defendant.

No. 94-CV-6343L.

No. 95-CV-6247L.

United States District Court, W.D. New York.

September 28, 1999.

Richard J. Lippes, Allen, Lippes & Shonn, Buffalo, NY, Frank H. Ferris, III, Weiner, Lawrence & Ferris, East Rochester, NY, for Plaintiffs.

Kenneth A. Payment, Rochester, NY, Michael A. Cerussi, Jr., Ronald GF. Crispi, Mark C. Dillon, Cerussi & Spring, White Plains, NY, for Defendants.

DECISION AND ORDER

LARIMER, Chief Judge.

These two cases both arise out of the March 1994 collapse of a salt mine being operated by defendant Akzo Nobel Salt, Inc. ("Akzo"). Several motions are pending in both cases, but since in many respects they involve similar if not identical issues of law, solely for purposes of these motions and this Decision and Order I am consolidating these cases pursuant to Rule 42(a) of the Federal Rules of Civil Procedure, which permits consolidation "of any or all the matters in issue" in "actions involving a common question of law or fact...."

PROCEDURAL BACKGROUND

Although the plaintiffs in both cases are owners of surface property above or near the mine, the two cases have very different procedural histories. In Integrated Waste Services, Inc. v. Akzo Nobel Salt, Inc., 95-CV-6247L (hereinafter "Integrated Waste" or "IWS"), the two plaintiffs, Integrated Waste Services, Inc. ("IWS"), and Bear Development Company, Inc. ("Bear"), sued Akzo for damage caused to the mine cavities (in which IWS and Bear held a reversionary interest) by water that filled the cavities in the aftermath of the collapse, as well as for surface damage. On April 16, 1996, I granted summary judgment in favor of Akzo on all of plaintiffs' claims. Integrated Waste Services, Inc. v. Akzo Nobel Salt, Inc., 921 F.Supp. 1037 (W.D.N.Y.1996).

Plaintiffs appealed, and the Court of Appeals for the Second Circuit affirmed as to plaintiffs' claims for damage to the mine cavities, but, stating that plaintiffs' evidence of surface damage, though "meager," was "enough to permit them to introduce more specific evidence at trial," reversed and remanded as to that issue alone. Integrated Waste Services, Inc. v. Akzo Nobel Salt, Inc., 113 F.3d 296, 303 (2d Cir.1997).

Akzo has now moved for summary judgment on this sole remaining claim on the grounds that plaintiffs have presented no evidence of surface damage, and that as a matter of law plaintiffs cannot recover for loss of market value due to public fear of future surface damage, i.e., so-called "stigma" damage. Plaintiffs have moved for summary judgment on the issue of liability, asserting that the only issue left upon remand from the Second Circuit is to establish the amount of plaintiffs' damages. Akzo denies that it has conceded liability for anything other than actual physical damage to surface properties, and maintains that plaintiffs have presented no evidence of such damage.

Plaintiffs in the other case, Mehlenbacher v. Akzo Nobel Salt, Inc., 94-CV-6343L (hereinafter "Mehlenbacher"), consist of both individuals and businesses who reside or do business in the vicinity of the collapsed portion of the mine. They seek to represent a class comprising all individuals, businesses, and professional entities residing within thirteen miles of the site of the collapse. Plaintiffs have moved to certify the proposed class pursuant to Rule 23 of the Federal Rules of Civil Procedure. Akzo has moved for partial summary judgment dismissing all claims for stigma damage and for emotional distress that is not related to actual physical illness or injury, including emotional distress related only to property damage.

Although Akzo has not conceded that any of the named plaintiffs have sustained physical damage to their surface property, it does contend that at the very least, the vast majority of the plaintiffs in both cases own property that is located in areas where the mine collapse and flooding caused no surface damage at all. According to Akzo, the area over that part of the mine that collapsed completely, i.e., where the underground salt pillars supporting the mine cavity roof completely dissolved (which Akzo refers to as "Area # 1"), covers only about fifty acres, which comprises less than one percent of the roughly 6550 acres over the entire mine. Akzo states that "Area # 2," which was subject to moderate subsidence, covers about 1000 acres (about fifteen percent of the mine surface area), and "Area #3," which covers the remaining 5500 acres, was subject to no physical surface damage at all. According to Akzo, plaintiffs' lands are primarily located in Area #3, and could not have sustained any surface damage. Akzo also states that in Area # 2, even though there was some subsidence in the immediate aftermath of the mine collapse, subsidence there now is actually occurring more slowly than before the collapse, because the mine there is completely filled with saturated saltwater, so that the pillars are no longer dissolving, and the water itself acts as a support for the surface.

DISCUSSION

I. Claims for "Stigma" Damage

Whether plaintiffs can recover damages for diminution in property value attributable to the stigma that has allegedly attached itself to their property in the minds of the public affects both cases in a number of ways. In Integrated Waste, this is a very significant issue because such damages comprise a major portion of the damages claimed by plaintiffs. This issue is important in Mehlenbacher for that reason as well, and also because it will have a bearing on the nature of the class or subclasses that might be appropriate for certification.

Plaintiffs in Integrated Waste contend that they clearly can recover stigma damages because of Akzo's alleged concession of liability in that case. According to plaintiffs, the only issue left to be tried upon remand from the Court of Appeals is one of damages, of which diminution in property value is a part. In support of this assertion, plaintiffs note the Second Circuit's statement that "Akzo, in an affidavit provided to this court, essentially concedes liability for substantiated surface damages resulting from the inundation of the salt mine," 113 F.3d at 302. Plaintiffs take the position that the "surface damages" referred to by the Second Circuit necessarily include stigma damages, because "[t]he diminution in the market value of IWS's property is obviously damage to the surface." Plaintiffs' Memorandum of Law at 3.

I find that proposition far from obvious, however, nor do I believe that the Court of Appeals made any ruling in that regard at all. For one thing, I interpret Akzo's statements concerning its concession of liability to mean only that it concedes liability for physical surface damage. Secondly, as a matter of law it is not at all certain that loss of market value constitutes legally cognizable "damage" giving rise to liability. Before one can recover damages for any thing, there must be an independent basis for liability to begin with. To say that a subsurface owner is strictly liable for damage to the surface, and therefore must pay for any diminution in value, begs the question. The real issue, then, is whether diminution in value does in fact constitute surface "damage."

The parties agree that New York law is controlling in this diversity action. As the Second Circuit has recognized, however, New York law is uncertain about whether stigma damages are recoverable in a tort action involving real property. Scribner v. Summers, 138 F.3d 471, 473 (2d Cir.1998) (per curiam). Most of the cases discussing such damages involve condemnation or tax proceedings, where the only real issue is the actual market value of the property. In the case at bar, the threshold issue is whether, even assuming that there has been a decrease in the property's value due to the mine collapse, plaintiffs are entitled to recover damages for that decrease.

Plaintiffs rely on several cases to support their view of proper damages. In Criscuola v. Power Auth. of the State of New York, 81 N.Y.2d 649, 602 N.Y.S.2d 588, 621 N.E.2d 1195 (1993), an eminent domain case involving a high-voltage power line easement over the claimants' property, the New York Court of Appeals held that the claimants could recover for diminution of market value attributable to alleged public fear of high-voltage lines, regardless of whether the fear was reasonable. As the court noted, though, "[t]he issue in a just compensation proceeding is whether or not the market value has been adversely affected." Id. at 652, 602 N.Y.S.2d 588, 621 N.E.2d 1195 (citation omitted). In other words, if the market value has been adversely affected by the respondent's actions, the claimant is entitled to recover; nothing else need be shown.

That is not necessarily true in a tort action against a private defendant. For example, if person A owns a house that enjoys a scenic view of a valley, and person B then builds a house blocking that view, potential buyers might not be willing to pay as much for A's house as they would have before B's house existed, but that does not mean that B is liable to A for the diminution in market value of A's house, absent some tortious act on B's part.

Commerce Holding Corp. v. Board of Assessors of the Town of Babylon, 88 N.Y.2d 724, 649 N.Y.S.2d 932, 673 N.E.2d 127 (1996), also cited by plaintiffs, is likewise not controlling here. Commerce Holding was a tax certiorari proceeding in which the petitioner sought a reduction of the assessed value of its property by a town board of assessors. The main issue was whether environmental contamination should be considered in valuing the property for tax purposes. The Court of Appeals held that it should, and stated that "the stigma remaining after cleanup" was one factor that could be considered. Id. at 732, 649 N.Y.S.2d 932, 673 N.E.2d 127. As...