Mel Foster Co. Properties, Inc. v. American Oil Co. (Amoco), U-H

• Court: United States State Supreme Court of Iowa
• Writing for the Court: ANDREASEN
• Citation: 427 N.W.2d 171
• Decision Date: 20 July 1988
• Docket Number: No. 86-1777,U-H
• Parties: MEL FOSTER CO. PROPERTIES, INC., Appellee, v. The AMERICAN OIL COMPANY (AMOCO), a Maryland Corporation, andaul Co. of Eastern Iowa, an Iowa Corporation, Appellants, and Chateau Standard, Inc., an Iowa Corporation, Defendant.

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427 N.W.2d 171 MEL FOSTER CO. PROPERTIES, INC., Appellee,
v.
The AMERICAN OIL COMPANY (AMOCO), a Maryland Corporation, and U-Haul Co. of Eastern Iowa, an Iowa Corporation, Appellants,
and Chateau Standard, Inc., an Iowa Corporation, Defendant. No. 86-1777. Supreme Court of Iowa. July 20, 1988.

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Rand S. Wonio of Lane & Waterman, Davenport, for appellee.

Richard C. Garberson, Steven J. Pace, and Constance Alt of Shuttleworth & Ingersoll, Cedar Rapids, for appellant Amoco.

Thomas M. Zurek and Ann M. VerHeul of Mumford, Schrage & Zurek, Des Moines, for appellant U-Haul.

Considered en banc.

ANDREASEN, Justice.

This appeal concerns approximately four acres of land owned by Mel Foster Company Properties, Inc. (Foster). The real estate is part of a commercial development park located in the City of Bettendorf and convenient to the Interstate 74 road system. Certain improvements have been made to the Foster land, such as installation of water and utilities, but the lots are as yet undeveloped. Property adjacent to these lots has been developed.

Foster's property is bordered by property owned by U-Haul Company of Eastern Iowa (U-Haul) and Amoco Oil Company (Amoco). Amoco's property is leased to Chateau Standard (Chateau). Foster's property has a very good potential for development. It is Foster's intention to hold the property vacant until a particularly good business arrangement develops, then to enter into a long-term lease agreement.

In October of 1982, gasoline was found in the basement sump of an adjacent home. The Iowa Department of Environmental Quality ¹ began a field investigation. A series of twenty-three monitoring wells were placed on Foster's property to determine

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the source and extent of the gasoline saturation.

The investigation resulted in the discovery that an underground gasoline tank of U-Haul and a distribution line at the Chateau gas station were leaking. Both the leaking tank and distribution line were replaced. Amoco designed and installed a recovery system on Foster's property. This system consisted of ditches filled with gravel and a series of pumps to remove accumulated gasoline. The recovery system has not removed all of the gasoline.

Foster's petition initially asserted several causes of action, including negligence, strict liability, trespass, and nuisance. Foster's petition was later amended to claim only nuisance damages and the case was tried to a jury.

At trial, the court instructed the jury that the measure of damages was the reduction of reasonable rental value of the property caused by the nuisance measured from discovery of the gas leak to the time of trial. The jury found that a nuisance was caused by seepage of gasoline onto Foster's property and awarded damages of $188,000. The jury found that U-Haul had caused sixty percent of the damage and that Amoco had caused forty percent of the damage. Because the trial court held that this was a temporary nuisance, Foster has the ability to bring subsequent suits to recover damages based on future lost rental value of the property. ²

Both Amoco and U-Haul challenge the district court's interpretation of nuisance law. Challenges are raised to the district court's definition of this contamination as a temporary nuisance, and the use of the diminuation of rental value as the measure of damages. Amoco asserts that no nuisance existed as a matter of law, and that it was error for the court to refuse to admit evidence concerning Foster's failure to mitigate damages. U-Haul claims that the district court erred in admitting an exhibit offered by Amoco which was a model of the underground water table configuration in this area. In addition, both defendants challenge the prejudgment interest awarded to Foster.

In the arguments, the parties discuss the definition of a nuisance, the determination of whether the nuisance has been abated, and the characterization of this nuisance as temporary or permanent. The focus of this dispute, however, is the correct measure of damages. Foster asserts that the district court correctly instructed the jury that the measure of damages was the loss of reasonable rental value; Amoco and U-Haul urge that Foster is limited to a one-time damage award based upon the diminuation of the market value of the property. To resolve this conflict, it will be necessary to review certain basic principles of nuisance law.

I. The statutory definition of a nuisance is found at Iowa Code section 657.1 (1987). That section provides:

Whatever is injurious to health, indecent, or offensive to the senses, or an obstruction to the free use of property, so as essentially to interfere with the comfortable use and enjoyment of life or property, is a nuisance, and a civil action by ordinary proceedings may be brought to enjoin and abate the same and to recover damages sustained on account thereof.

The common law defines a nuisance as an actionable interference with a person's interest in the private use and enjoyment of their land. See Patz v. Farmegg Products, Inc., 196 N.W.2d 557, 560 (Iowa 1972); Riter v. Keokuk Electro-Metals Co., 248 Iowa 710, 721, 82 N.W.2d 151, 157 (1957). Nuisance law is based on the principle that "[o]ne must use his own property so that his neighbor's comfortable and reasonable use and enjoyment of his estate will not be unreasonably interfered with or disturbed." Patz, 196 N.W.2d at 560 (quoting Bates v. Quality Ready Mix Co., 261 Iowa 696, 702, 154 N.W.2d 852, 857 (1967)). The statutory definition of a nuisance does not modify the common-law rules regarding a nuisance. Schlotfelt v. Vinton Farmers' Supply Co., 252 Iowa 1102, 1107, 109 N.W.2d 695, 698 (1961).

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Amoco asserts that no nuisance existed as a matter of law because the injury to Foster's property was not shown to have been caused by intentional, negligent, or reckless conduct. We disagree. It is well established that the existence of a nuisance is not "affected by the intention of its creator not to injure anyone." Patz, 196 N.W.2d at 561; see also Ryan v. City of Emmetsburg, 232 Iowa 600, 605, 4 N.W.2d 435, 439 (1942).

The defendants claim that the nuisance was abated at the time that U-Haul and Amoco...