Houston Unlimited, Inc. Metal Processing v.
Mel Acres Ranch
Texas
Supreme Court, No. 13-0084 (August 22, 2014)
Justice
Boyd (Opinion)
The Texas Supreme Court reversed a judgment awarding a landowner damages based on diminished market value attributed to alleged stigma caused by remediated contamination. Declining to decide whether “stigma damages” are ever recoverable, the Court held the expert opinion supporting the judgment was legally insufficient and rendered a take-nothing judgment.
Mel Acres Ranch owns 155 acres of undeveloped ranchland across the highway from a metal processing facility operated by Houston Unlimited. After contamination by toxic metals was discovered in the area, the Texas Commission on Environmental Quality cited Houston Unlimited for failing to prevent the discharge of industrial hazardous waste and ordered it to undertake remediation actions. Houston Unlimited complied with TCEQ’s order and paid a fine.
Mel Acres sued Houston Unlimited for nuisance, trespass, and negligence. A jury found the defendant had not committed trespass causing permanent injury or created a permanent nuisance. But it found Houston Unlimited was negligent, and Mel Acres was awarded judgment for approximately $350,000 in lost market value, based on expert testimony that its property value had been diminished by the stigma arising from the contamination even after remediation. The Houston 14th Court of Appeals affirmed.
The Supreme Court granted Houston Unlimited’s petition for review, and held that the judgment was not supported by legally sufficient evidence. The Court recognized that other jurisdictions had awarded stigma damages, i.e., “damage to the reputation of the realty” caused by negative public perception of the effect of environmental contamination. It also acknowledged an apparent conflict in its own precedents governing damages for reduction in market value as well as repair or remediation costs. But it declined to resolve those issues, because “even if Texas law permits recovery of stigma damages, Mel Acres’ evidence was legally insufficient to prove them.”
The only evidence offered in support of the damage award was the opinion of an experienced real estate appraiser whose qualifications were not disputed. After conducting a detailed review of the expert’s methodology, underlying data, and analysis, the Court found several fatal flaws. Although this was “not a case in which the expert failed to offer any basis for her opinion,” the Court found she relied on facts that “do not actually support her opinion.” Ultimately, the Court concluded that the expert’s “reliance on insufficient data and unsupported assumptions and the analytical gaps in her analysis render her opinion conclusory and without evidentiary value.” It therefore reversed and rendered judgment for Houston Unlimited.
