Scheufler v. General Host Corp.

• Decision Date: 18 September 1997
• Docket Number: 96-3031,Nos. 96-3011,s. 96-3011
• Parties: , 38 Fed.R.Serv.3d 1421, 28 Envtl. L. Rep. 20,164, 97 CJ C.A.R. 2054 Ted SCHEUFLER, Debra Scheufler, husband and wife; Paul Scheufler, Elva Scheufler, husband and wife; Harvey Wilhaus; Alice M. Richmond; Mabel V. Colle Trust; Kenneth D. Knapp, Eileen Knapp, husband and wife; Peirce Knapp Farms, Inc., by agent Walter C. Peirce; Violet Stockham; Coll-Mar Farm, Inc., and Lee Scheufler, Plaintiffs-Appellees-Cross-Appellants, v. GENERAL HOST CORPORATION, a New York corporation, Defendant-Appellant/Cross-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1261

126 F.3d 1261

45 ERC 1346, 38 Fed.R.Serv.3d 1421,

28 Envtl. L. Rep. 20,164,

97 CJ C.A.R. 2054

Ted SCHEUFLER, Debra Scheufler, husband and wife; Paul

Scheufler, Elva Scheufler, husband and wife; Harvey

Wilhaus; Alice M. Richmond; Mabel V. Colle Trust; Kenneth

D. Knapp, Eileen Knapp, husband and wife; Peirce Knapp

Farms, Inc., by agent Walter C. Peirce; Violet Stockham;

Coll-Mar Farm, Inc., and Lee Scheufler, Plaintiffs-Appellees-Cross-Appellants, v. GENERAL HOST CORPORATION, a New York corporation,

Defendant-Appellant/Cross-Appellee.

Nos. 96-3011, 96-3031.

United States Court of Appeals, Tenth Circuit.

Sept. 18, 1997.

William R. Sampson (Bill J. Hays and Paul W. Rebein with him on the brief), Shook, Hardy & Bacon L.L.P., Overland Park, KS, for appellant.

Lee Turner, Lee Turner, P.A., Great Bend, KS, and Deborah Turner Carney, Carney Law Office, Golden, CO, for appellee.

Before EBEL, LOGAN, and BRISCOE, Circuit Judges.

BRISCOE, Circuit Judge.

Plaintiffs, a group of landowners and tenant farmers in Rice County, Kansas, filed this trespass and private nuisance action against defendant General Host Corporation (General Host), alleging General Host's salt mining operations polluted a fresh water aquifer underlying plaintiffs' properties and prevented plaintiffs from raising irrigated crops on their land. Plaintiffs filed their action pursuant to 28 U.S.C. § 1332(a)(1), alleging diversity jurisdiction. A jury returned a verdict in plaintiffs' favor on their private nuisance claims and, following the verdict, the district court imposed punitive damages against General Host in the amount of $550,000. General Host appeals the jury's verdict and the award of punitive damages. Plaintiffs have filed a cross-appeal challenging the district court's decision to require the tenant farmers to join as party plaintiffs. We have jurisdiction pursuant to 25 U.S.C. § 1291 and affirm.

I.

Since 1908, the American Salt Company (American Salt) has operated a salt manufacturing plant in Rice County, approximately one-half mile southeast of Lyons, Kansas. From 1971 to 1988, American Salt was owned and operated by the Cudahy Company, a Delaware corporation with its principal place of business in Arizona. In turn, the Cudahy Company was a wholly owned subsidiary of defendant General Host, a New York corporation.

Cow Creek, a minor tributary of the Arkansas River, is located two miles south of Lyons. Underlying Cow Creek at varying depths of approximately ten to seventy feet is the Cow Creek Valley Aquifer, a fresh-water aquifer approximately one to two miles wide. The water in the aquifer flows in a southeasterly direction at a rate between one and one-half and five feet per day. Without the influence of pumping wells, it would take approximately ten years for the water in the aquifer to travel one mile.

Plaintiffs are owners and tenants of real property in rural Rice County, the majority of which is used for agricultural production. The specific breakdown of land ownership is as follows:

Owner Tract

Ted and Debra Scheufler 160 acres in Southwest Quarter of Section 28,

Township 20 South, Range 7 West.

Paul and Elva Scheufler 80 acres in the West Half of the Southeast

Quarter of Section 28, Township 20 South, Range

7 West.

Harvey Wilhaus 277 acres in Sections 4 and 5, Township 21 South,

Range 7 West.

Mabel Colle Trust 147 acres in the Northeast Quarter of Section 33,

Township 20 South, Range 7 West.

Kenneth and Eileen Knapp 160 acres in the Southeast Quarter of Section 32,

Township 20 South, Range 7 West.

Violet Stockham 75 acres in the West Half of the Southwest

Quarter of Section 12, Township 20 South, Range

8 West.

Peirce/Knapp Farms, Inc. 80 acres in the South Half of the Southeast

Quarter of Section 13, Township 20, Range 8

West.

Alice Richmond 106.1 acres in the Southwest Quarter of Section

29, Township 20, Range 7 West.

All of these parcels of real property lie, in whole or in part, over the aquifer. Prior to flowing under these parcels, however, the water in the aquifer flows under land occupied by the American Salt plant.

In 1977, owners and tenants of land upstream from plaintiffs filed suit against General Host, Cudahy, and American Salt, claiming salt from American Salt's mining operations had contaminated the water in the aquifer, leaving it unfit for use in irrigating crops. Following a non-jury trial, the district court found the water in the aquifer was heavily polluted with salt, rendering it unfit for domestic and irrigation use. Miller v. Cudahy Co., 592 F.Supp. 976, 990-91 (D.Kan.1984) (Miller I ) ("Salt concentrations of over 30,000 parts per million have been recorded in water drawn from the aquifer."). This salt pollution, the court found, resulted from two sources directly attributable to American Salt--through surface spills at the American Salt plant, and through direct subsurface leaks from American Salt's solution mining and settling activities. Although the court found growing irrigated crops (such as corn) would have been the most profitable use of the land owned by plaintiffs, it found the salt pollution of the water in the aquifer prevented plaintiffs from planting irrigated crops. ¹

Based upon these factual findings, the district court concluded the American Salt plant was a private, continuing, abatable nuisance per accidens (i.e., a private nuisance that could be abated through proper operation of the salt plant). Alternatively, the court concluded the plant was operated in a negligent manner and caused harm to the plaintiff landowners. Accordingly, the court awarded plaintiffs $3,060,000 "for the temporary damages to [their] annual crops wrought by the defendants' continuing abatable nuisance." Id. at 1005. In addition, the court awarded plaintiffs $49,500 in consequential damages to two domestic water wells and a dairy operation, and approximately $8,200 in damages resulting from brine flowing over certain portions of plaintiffs' land. Finally, based upon what it concluded was defendants' wanton conduct, the court awarded plaintiffs $10,000,000 in punitive damages. On appeal, this court affirmed the district court's decision in substantial part. Miller v. Cudahy Co., 858 F.2d 1449 (10th Cir.1988) (Miller II ) (upholding findings of liability and award of punitive damages, but reversing decision to tax as costs against defendants approximately $40,000 in fees and expenses incurred by plaintiffs' trial expert during post-trial investigation of defendants' post-trial remedial efforts). ²

In Miller I, the district court concluded the salt pollution in the aquifer posed a threat to other landowners downstream:

Because the aquifer flows, the salt dissolved in it will continue to move downstream unless steps are taken to extract that salt. Thus, increasing numbers of the state's citizens will be injured as the pollution continues to spread. The aquifer joins the Arkansas River at Hutchinson, and that river then flows through Wichita, ... before entering the state of Oklahoma.

Miller I, 592 F.Supp. at 999. However, both the district court and this court concluded the damage to the aquifer could be remedied. Id. ("There is a very high probability that remedial measures could prove effective in removing a substantial amount of the pollution from the aquifer at a reasonable cost well within the range of the defendants."); Miller II, 858 F.2d at 1456 ("The damage to the aquifer is remediable.").

In 1987, the Kansas Department of Health and Environment (KDHE) ordered General Host to develop and implement a plan to clean up the aquifer. Following this order in February 1988, General Host sold the American Salt plant to NAMSCO. As part of the sale, NAMSCO agreed to take reasonable measures, at General Host's expense, to comply with KDHE's 1987 order.

In January 1987 (at approximately the same time KDHE issued its order to General Host) the Kansas Department of Water Resources (DWR) adopted an administrative policy which defined a specific area in Rice County (the Lyons Special Water Quality Use Area) where there was a known instance of contamination and water quality problems (i.e., the contamination caused by American Salt). The policy set forth a procedure for DWR to use in reviewing applications for proposed appropriation of water for beneficial use in that area. In particular, the procedure allowed an application to be held until such time as DWR could determine whether the proposed application would adversely affect the proposed cleanup.

In April 1990, the DWR enacted a moratorium on new permits for the entire Big Bend Water Management District (the District). The District encompasses parts of eight counties, approximately four or five million acres, including the Lyons Special Water Quality Use Area (which constitutes approximately one percent of the District's total acreage).

The instant case was filed by plaintiffs in February 1991. Plaintiffs claimed the contaminated portion of the aquifer had reached the area under their property and prevented them from growing irrigated crops. Accordingly, plaintiffs claimed the pollution from the American Salt plant constituted a trespass to their lands and a private nuisance that substantially interfered with their rights to use and enjoy their lands.

At the time the lawsuit was filed, none of the plaintiffs had applied for, or received, a permit from DWR to pump water from the aquifer. Subsequently, in 1993, all of the plaintiffs applied for such permits. To date, none of the permits have been acted upon by the DWR.

Trial commenced on June 27, 1995, and the jury returned a special verdict in favor of plaintiffs on their nuisance claims on August 1, 1995. In particular, the jury concluded (1) the groundwater underlying plaintiffs' properties was unsuitable for irrigation because of salt pollution emanating from the American Salt plant, (2) plaintiffs were unable to irrigate because of salt pollution in the aquifer, and (3) p...