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California District Court Finds Temporary Diminution in Property Value Sufficient to Withstand Summary Judgment on Common Law Claims

In 2015, a pipeline in Santa Barbara County, California ruptured and leaked oil, some of which made its way to the ocean and eventually washed up on local beaches. A class of plaintiffs brought an action in federal district court against defendants Plains All American Pipeline, L.P., and Plains Pipeline L.P. (“Plains”) for claims of statutory violations, negligence, public nuisance, continuing private nuisance, nuisance per se, and trespass. In response, Plains filed a motion for summary judgment which sought to have the claims of the Property Subclass plaintiffs dismissed, primarily on the basis that the harm caused by the oil spill was a “temporary diminution in property value,” and not recoverable as a matter of law.

Last week, Judge Gutierrez of the District Court for the Central District of California issued an order denying most of the defendants’ motion for summary judgment, thereby allowing the litigation to continue. See Keith Andrews et al v. Plains All American Pipeline, L.P. et al., CV 15-4113 PSG (JEMx) (Mar. 17, 2020). The court held that several of plaintiffs’ claims contained genuine issues of material fact that should be brought before a jury, and that it could not rule as a matter of law that plaintiffs had not suffered harm. The claims which merited the most analysis in the order were the common law property claims, i.e.: negligence, nuisance, and trespass.

The court divided the Property Subclass plaintiffs into two categories for its analysis: the Oiled Properties (properties that abut the mean high tide line and have some private beach on their property); and the Unoiled Properties (properties that do not abut the mean high tide line, but do front the beach). Interestingly, for the most part, the court analyzed the two groups in the same way, only making a real distinction between the two for the trespass claim. Plaintiffs conceded that the Unoiled Properties did not have a cognizable trespass claim because there was no physical invasion of their property by the oil, so the Unoiled Properties’ part of that claim was dismissed.

In its argument against plaintiffs’ continuing nuisance claim, Plains argued that the plaintiffs could not recover for the “temporary, abatable” nuisance of having oil on their beach where the “value of the premium would be restored once the beach was no longer affected.” Id. at 9. Plaintiffs’ expert countered, however, that under his methodology, the lost rental value for the period the beach was contaminated is discrete and recoverable. Plaintiffs’ expert explained his calculation as follows: “[t]he lost value of the premium paid for [beach] amenities can be calculated as the unimpaired rental rate of the subject property, less the rental rate of an otherwise similar property without the beach proximity (i.e., a property that lacks those amenities) – over the period where this valuable amenity was effectively lost.” Id. (alterations in original, internal quotations omitted). The court held that this theory of damages was enough to bring before a jury, writing that it could not “conclude that Plaintiffs’ measure of damages for their continuing nuisance claim is invalid as a matter of law based on this argument.” Id.

In terms of the private nuisance claim, Plains put forth the argument that oil on the beach is analogous to a barrier at the end of a road that blocked private access to the beach but did not block public access to the beach, which has been held in California to not constitute a private nuisance (because the homeowners in that case could still get to the beach via a public walkway). The court did not view the issue in the same way, and again sided with the plaintiffs, noting, “the Court cannot conclude that no triable issue exists as to whether the characteristics of toxic oil on beaches adjacent to private property could not interfere with the use and enjoyment of beachfront private property.” Id. at 7.