Rockwell Intern. Corp. v. Wilhite, 1997-CA-000188-MR.

• Decision Date: 08 August 2003
• Docket Number: No. 1997-CA-000188-MR.,1997-CA-000188-MR.
• Citation: 143 S.W.3d 604
• Parties: ROCKWELL INTERNATIONAL CORPORATION, Appellant, v. Vance WILHITE and 74 Additional Appellees Named in Notice of Appeal, Appellees.
• Court: Kentucky Court of Appeals

143 S.W.3d 604

ROCKWELL INTERNATIONAL CORPORATION, Appellant, v. Vance WILHITE and 74 Additional Appellees Named in Notice of Appeal, Appellees.

No. 1997-CA-000188-MR.

Court of Appeals of Kentucky.

August 8, 2003.

Discretionary Review Denied by Supreme Court August 18, 2004.

Appeal from the Supreme Court, Lambert, C.J M. Stephen Pitt, Virginia H. Snell, J. Anthony Goebel, Donald J. Kelly, Wyatt, Tarrant & Combs, Louisville, KY, Andrew L. Frey, Evan M. Tager, Charles A. Rothfeld, Mayer, Brown & Platt, Washington, DC, for appellant, Rockwell International Corporation.

James R. Cox, John S. Reed, Reed Weitkamp Schell Cox & Vice, Louisville, KY, for amici curiae, Logan County Economic Development Commission, Inc., Associated Industries of Kentucky and Kentucky Coal Association.

Kent Masterson Brown, Danville, KY, Daniel J. Popeo, Paul D. Kamenar, Washington Legal Foundation, Washington, DC, for amici curiae, Washington Legal Foundation and Allied Educational Foundation.

Charles L. Cunningham, Jr., Charles E. Fell, Jr., Michael McDonald, Louisville, KY, John W. "Don" Barrett, Lexington, MA, W. Patrick Murray, Steven C. Bechtel, Murray & Murray, Sandusky, OH, Thomas M. Jessee, Jessee & Jessee, Johnson City, TN, Gary E. Brewer, Leslie A. Muse, Morristown, TN, Thomas A. Noe, III, Russellville, KY, William Gordon Ball, Knoxville, TN, for appellees.

Before KNOPF and TACKETT, Judges; and HUDDLESTON, Senior Judge.¹

OPINION

HUDDLESTON, Senior Judge.

This case, involving alleged injury to the appellee landowners' properties in Logan County, Kentucky, as the result of the deposit thereon of polychlorinated biphenyls (PCBs) by Rockwell International Corporation, is on remand from the Supreme Court. At trial, there were 50 separate awards to the landowners of compensatory damages totaling $7,566,118.00 for 54 tracts of land. Punitive damages in the amount of $210,000,000.00 were awarded to all landowners jointly. We initially reversed the judgment.

Although the Supreme Court affirmed our initial decision² that the testimony of the landowners' valuation witness, Charles Snyder,³ was inadmissible, it went on to say that:

There was other evidence, however, of permanent injury to properties for which landowners may be entitled to compensation, and the proper remedy is to remand to the trial court for a new trial in accordance with the views set forth herein.

Prior to a new trial, however, there are other issues that must be decided by the Court of Appeals. On appeal from the final judgment, Rockwell presented numerous issues, some of which asserted a right to prevail on all claims, while others asserted a right to prevail on the claims of particular landowners. As the Court of Appeals' decision rendered a ruling on these other issues unnecessary, our disposition requires remand to consider the issues raised by Rockwell but left unresolved by the Court of Appeals.

Accordingly, this case is hereby remanded to the Court of Appeals for consideration of the issues presented by Rockwell but not decided in its opinion of January 14, 2000. In the event the Court of Appeals discovers no reversible error in other respects, the case shall be returned to the trial court for a new trial in conformity with this opinion and the subsequent opinion of the Court of Appeals, subject to the right of either party to move for discretionary review in this Court.⁴

To comply with the Supreme Court's mandate that we consider the issues raised by Rockwell in its initial appeal which were not decided, we undertake to answer the following questions:

I. What is the applicable statute of limitations and are the landowners' claims barred by that statute?

II. Do the landowners have a valid claim for negligent trespass?

III. Do the landowners have a valid claim based on the creation by Rockwell of a permanent nuisance?

IV. Was the award of punitive damages the result of passion and prejudice?⁵

I. Statute of Limitations

The first question we must answer on remand is: what limitation period applies on the current facts and, further, how does its application affect the recovery, if any, to which the landowners are entitled? Our analysis begins with a review of the arguments set forth by both the landowners and Rockwell.

According to Rockwell, the landowners "cannot recover because their own evidence showed that there was no decline in the value of their properties within the period of limitations." Further, the landowners "concede that the applicable statute of limitations bars them from recovering for damages occurring more than five years before the action was filed" and, under the landowners' own theory of the case, their land became worthless upon the discovery of a detectable PCB presence which was established prior to 1988.⁶ This means that the landowners could not have suffered any further damage within the limitation period because "the proper measure of permanent damage to real estate in Kentucky is the difference in the fair market value of the real estate just before and after the injury."⁷ Inasmuch as the landowners offered no evidence to establish the value of their property just before or after the injury, they have, Rockwell contends, "altogether failed to establish an element essential to their claim."

In response, the landowners claim that Rockwell's argument "ignores [Kentucky Revised Statutes] KRS 413.190(2), which tolls the limitations period during the pendency of any concealment by a defendant which frustrates a claim." The jury, the landowners contend, "heard considerable testimony which documented such concealment and affirmative acts designed to mislead the public." The landowners also rely on the circuit court's determination that the discovery rule is applicable in property damage cases, emphasizing that "the claim does not arise in matters such as this until the damage is apparent."⁸ The landowners were unaware, they say, that "they had suffered an actionable trespass to their land until sometime after 1988" because, although "the trespass itself may have occurred, at least in part, many years earlier, the occurrence of damage as a result, an essential element of the claim, happened much later." Since PCBs are "invisible to the eye, odorless, and can only be detected through costly testing" and present a "progressive problem," the landowners also contend that "it would be inappropriate to fault [them] for not racing to the courthouse to bring claims they did not even comprehend existed" and, likewise, that their inability to "pick a magical, non-existent date of injury" should not be fatal to the claims asserted.

In its brief on remand, Rockwell reiterates its contention that the landowners' suit is governed by a five-year limitations period, citing KRS 413.120 and Wimmer v. City of Ft. Thomas⁹ as authority. According to Rockwell, because the landowners characterize the injury to their property as "permanent," the cause of action accrued on the date of the first injury and "everyone agrees that [the landowners'] properties were first exposed to PCBs many more than five years prior to the initiation of this action." In the alternative, Rockwell argues that even if the trespass in question is deemed to have been continuous in nature, as found by the circuit court, the statute of limitations still operates to bar all claims for damages occurring more than five years prior to the date (March 26, 1993) on which the complaint was filed. Thus, the landowners would have to establish the difference in the fair market value of the property "that was inflicted within the limitations period." As the "minimal levels of PCBs" present on their property have not actually adversely impacted its market value, Rockwell asserts that the landowners cannot make the required showing.

The landowners, on the other hand, argue that "Rockwell's hidden misconduct from before 1988 should be considered by the jury when assessing punitive damage issues." In their view, although a cause of action "does not accrue until there has been a manifestation of damage or injury," the "entire panoply of the wrongdoer's conduct is admissible and considered" for the purpose of establishing the elements of the cause of action. According to the landowners, both District Union Local 227, Amalgamated Meat Cutters & Butcher Workmen of North America, AFL-CIO v. Fleischaker¹⁰ and the more recent case of Sand Hill Energy, Inc. v. Ford Motor Co.¹¹ provide support for this position.

Since the circuit court's finding to that effect has not been challenged, the landowners are charged with having notice regarding PCB contamination as of September 1988. Pursuant to KRS 413.120, their action against Rockwell had to be "commenced within five years after the cause of action accrued," assuming the statute applies. Because the landowners filed their complaint on March 26, 1993, it is beyond dispute that they initiated their action within the designated limitations period.

The inquiry does not end there however. Rather, the question becomes when the cause(s) of action accrued, a determination that necessarily hinges on whether the injury is characterized as permanent or temporary in nature, and the resolution of which dictates when the applicable limitations period began to run thereby defining the extent of the landowners' injury for purposes of recovery.

In Wimmer,¹² we observed that Kentucky's highest court had previously held that actions for damages to real property caused by another's negligence sound in trespass, and the five-year statute of limitations applies to them. Because Commonwealth, Dept. of Highways v. Ratliff¹³ involved a one-time incident of damage to a highway bridge by a truck and driver, the Supreme Court determined that suit had to be brought during the five-year period following the collision. Since the appellant in Wimmer alleged a continuing trespass as a result of the city's negligent failure to maintain its street adjacent to his property,...