In May, 1994, forty-two families in Sutter Creek, California learned their homes, which had been constructed between 1975 and 1985, were built on land contaminated with mine tailings containing arsenic. In California’s Gold Country background levels of arsenic in soil are approximately 22 parts per million [ppm]. But on these properties, arsenic levels were as high as 1320 ppm, well into the toxic range.
The lawsuit that followed is reported in three parts. Part I explains how California’s statute of limitations for permanent nuisance and statutory exclusion for claims for latent construction defects discovered more than ten years after construction have insulated polluters from liability and, more importantly, how federal law provides for delayed discovery and authorizes the collection of damages otherwise not available. Part II discusses the Sutter Creek homeowners’ responses to defenses raised by the mine owner and a developer of this subdivision. Part III reviews the damages available in a case of permanent nuisance.
A settlement was obtained for these Amador County homeowners because of a little known federal law which allows delayed discovery in cases qualifying under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA), 42 USC Section 9601[known as CERCLA or Superfund”]. CERCLA also suspends the California ten year statute of limitations on construction defects in toxic pollution cases.
BACKGROUND AND DISCOVERY OF ARSENIC IN SUTTER CREEK
The Central Eureka Mine opened in 1890. The headframe is less than a quarter mile east of Highway 49, sitting on a hill top, just north of the Westover Amador County Airport. The mine and its mill operated continuously from that time until closed by President Roosevelt in 1942. After WWII, the mine reopened and operated until 1958. Quartz ore was crushed until reduced to a fine sand that could pass through a 1/32nds of an inch screen. It then was treated with cyanide to extract the gold and the waste, known as “slime,” was sluiced to a. pond, where the water drained into a creek, leaving behind the fine sands in a mine tailings pile located approximately 150 yards east of Highway 49. By 1958 the mine tailings pile was three stories high and had a top surface area of 11 acres. The Central Eureka Mine was aware of the presence of arsenic in the gold ore processed on the site because of U.S. Mint assay reports, but in the 1960 sale of the tailings pile and the surrounding 19 acres the deed mentioned mine tailings on the property but did not disclose that the tailings contained arsenic. Through a series of corporate mergers, the Central Eureka Mining Corporation became the property of AlliedSignal, Inc., a Fortune 500 business.
By 1970, the 30 acre parcel had been transferred several times and it was approved for housing by the City of Sutter Creek as the Mesa de Oro and Gold Quartz Subdivisions. The County Health Department was aware of the presence of arsenopyrite on the site, which is reported to be “safe” in its natural state. An environmental consultant suggested the crushed arsenopyrite should be tested. Mesa de Oro was developed on top of the mine tailings pile. The Gold Quartz Subdivision lots bordered the tailings pile on the west and south and became the location for large, attractive homes with an average value of $350,000, before the discovery of arsenic.
In April, 1994 Cal-OSHA received a report that a worker at Mesa de Oro had developed rashes and flu symptoms. Arsenic was determined to be the cause. The California Department of Toxic Substances Control of Cal/EPA and US/EPA joined in the investigation. Cal-OSHA ordered a halt to all construction on the site and the county stopped home sales.
In May, 1994, Cal/EPA reported that the waste pile contained high concentrations of arsenic which could be inhaled in dust and dissolved in water. Soil sampling in May, 1994 showed arsenic levels on Mesa de Oro ranging from 115 ppm to 1,320 ppm. Levels in excess of 500 ppm are hazardous waste under California law.
In November, 1994 Cal/EPA and US/EPA released the results of their tests on soil from the Mesa, the slopes and the yards around the tailings pile, which showed concentrations of 90 to 1,142 ppm. Arsenic also was found in homeowners’ vacuum cleaner bags. Of 14 tested vacuum bags, eight had arsenic: five had concentrations between 20 and 42 ppm and three had concentrations between 278 and 889 ppm.
Arsenic is commonly found in gold ore and in its natural state is not considered a mining hazard, but once it is pulverized the increased surface area accelerates its interaction with soils, salts and minerals, and renders the arensic salts bioavailable and bioaccessible. California EPA toxicologist Dr. Charles Salocks reported that testing by the State of California, and a contractor hired by AlliedSignal confirmed, that the arsenic in the dirt and sands found on Mesa de Oro were bioavailable and bioaccessible.
A 1997 study by Drs. Golub and Keen of the UC Davis Department of Internal Medicine and Nutrition also concluded that arsenic from Mesa de Oro soil is bioavailable. Fortunately testing of human hair and urine in late 1994, well after the community had been alerted to the arsenic hazard and had taken steps to limit their exposures, did not reveal any significant deposits of arsenic. According to the Agency for Toxic Substances and Disease Registry, arsenic clears through human urine and blood in 48 hours. Although the toxicity of arsenic is well known, it is a carcinogen only in humans, but not in animals. Accordingly there are no animal carcinogenicity studies. The latency period for skin cancer in humans is estimated to be three to four decades according to one Asian study of arsenic in well water.
It is common for pollution sites to languish on the U.S. EPA’s National Priority List for years before action is taken. Fortunately these subdivisions were declared an Emergency Response Site. Remediation work began in 1995 and was completed in 1996. It included removing contaminated dirt and replacing with clean fill, as well as grading, capping, and replanting the mine tailings pile, and installing drainage and water diversion channels.
Utilizing original sales reports, appraisals both before and after the 1994 disclosure of arsenic, data on the county-wide appreciation of homes reported by the Amador County Development Corporation and comparable sales in the City of Sutter Creek, and after an individual inspection of each property, a market study and appraisal by an MAI certified appraiser showed that homeowners had suffered an estimated diminution in value of approximately 25%. Total diminution in value was approximately $2,000,000.
THE CONSENT DEFENSE: AN OXYMORON
AlliedSignal claimed that it was lawfully entitled to pollute its own property. For that reason it lawfully “consented” to the nuisance years ago, and accordingly the three year statute for a permanent nuisance action has run under Beck Development v. Southern Pacific Transportation Co. (1996) 44 Cal. App. 4th 1160, 52 Cal. Rptr. 518.
In Beck, the court found that the Southern Pacific gave itself permission to cause a permanent nuisance and therefore was immune from suit because the Southern Pacific conducted its activities on the property with the consent of the owner, namely itself, lawfully and in an open and notorious manner from 1926 to 1945. It sold the property to John Hachman with the storage reservoir in open view and with his full knowledge of the past usage of the property. Hachman acquired no right to sue Southern Pacific for private nuisance and could have passed no such right to subsequent grantees, including Beck. At 555.
Beck went on to apply the three year statute of limitations for a permanent nuisance. In perverse “logic” the court in Beck explained its pro-pollution view: “In an action involving tortious injury to property, the injury is considered to be the property itself rather than the property owner and thus the running of the statute of limitations against a claim bars the owner and all subsequent owners of the property. (Citations omitted) In other words, the statute of limitations does not commence to run anew every time the ownership of the property changes hands. (Ibid.) The injury to the property which Beck complains occurred more than 40 years before this action was commenced and thus this action is time barred unless there is some cause for avoidance of the statute of limitations.” 44 Cal. App. 4th 1160, 1216, 52 Cal. Rptr. 2d 518, 556.
The holding in Beck that Southern Pacific could create a nuisance, consent to it, and then sell the nuisance to another party would have the affect of allowing anyone who owned a large parcel of land to create a permanent nuisance, hold onto it for three years, and thereafter be immune. That makes no sense, is counter to public policy and would turn California into a polluter’s heaven.
It has long been the law that “a man may not create a public nuisance on his own land.” People v. Russ (1901) (In bank) 132 Cal. 102, 105. Understandably if anyone could consent to their own misconduct their would be no nuisance law.
If Beck is a correct statement of California law, then any polluter can willfully destroy its own land at any time, cause the three year statute for a permanent nuisance to begin to run and after holding the property for three years secretly dispose of it and never be held responsible for creating a nuisance, as long as it causes a permanent mess.
The consent defense traditionally arises in the special context of a lessor and lessee, when the lessee has the permission of the lessor to engage in certain acts which the lessor later claims polluted his land.
In Mangini v. Aerojet-General (1996) 12 Cal. 4th 1087, 51 Cal. Rptr. 272 the defendant argued that it conducted a lawful activity on the lessor’s property with the consent of the lessor and for that reason the lessor would be precluded from pursuing a cause of action for nuisance. Mangini noted that consent was a defense under Section 839 of the Restatement 2d of Tort in cases involving an abatable nuisance:
A possessor of land is subject to liability for a nuisance caused while he is in possession by an abatable artificial condition on the land if the nuisance is otherwise actionable and (a) the possessor knows or should know of the condition and the nuisance or unreasonable risk of nuisance involved, and (b) he knows or should know that it exists without the consent of those affected by it, and (c) he has failed after a reasonable opportunity to take reasonable steps to abate the condition or to protect the affected persons against it.
But, the consent envisioned only extends to an abatable nuisance in an action between a lessor and a lessee, so Mangini concluded that “(I)n these circumstances, for reasons already advanced, we are convinced that the lessee must have a defense that his use of the property was lawfully undertaken pursuant to the consent of the lessor.” 230 Cal. App. 3d 1139-40, 21 Cal. Rptr. 836. That is as far as the “consent defense” can be taken under California law.
The California Supreme Court had every opportunity to take up the Beck case, along with Mangini in 1996 and create rules that would hold polluters accountable, but it failed in its obligation to protect Californians and California resources from polluters. The facts in Beck are outrageous.
Newhall Land and Farming Company v. Superior Court (1993) 19 Cal. App. 4th 334, 23 Cal. Rptr. 377 illustrates why the consent defense has a limited application. In Newhall, Mobil Oil operated a natural gas processing plant near Tracy between 1950 and 1970, when it sold the plant to Amerada Hess. During the ownership by the oil companies, hazardous substances were dumped which polluted the soil and entered the ground water. Thereafter the plant was dismantled and rendered inoperative. In 1971 Amerada sold. In 1984, after several intervening owners, Newhall Farming bought the land. At the time there was no visible evidence of prior discharges and Newhall did not suspect the property was contaminated. Newhall discovered the contamination in 1989. Newhall sought a writ of mandate to review rulings on demurrers on his claims for nuisance and negligence claims in which the court discussed and ruled out on a number of defenses.
On the nuisance issue, the court held, as in Mangini (1991), that “Newhall is not precluded from stating a cause of action for nuisance on the ground that Mobil and Amerada could not cause a nuisance to their own property.” At 343, 382. “As noted by the Mangini court, under California law, both the parties who maintain the nuisance and the parties who create the nuisance are responsible for the ensuing damages.” Ibid. Defendant’s reliance upon Pinole Point Properties v. Bethlehem Steel Corp. (N. D. Cal. 1984) 596 F. Supp. 283, was misplaced because, contrary to the statement of law in Pinole, “an owner of property may sue for damages caused by a nuisance created on the owner’s property” [at 344, 382] and while in Pinole the purchaser knew of the existence of contamination before acquiring the land, when Mobil and Amerada sold, no disclosure of contamination was made.
Defendants maintained in Newhall that at the time of contamination they could not be held liable to themselves for creating a nuisance, therefore Newhall could not state a nuisance claim against them and there is no continuing nuisance where no nuisance existed at the inception of the wrongful condition. This claim, which in effect proposes that a polluter can create a nuisance with its own permission, was readily rejected.
As for the defendant’s consent defense, the court declined the application in this context because “the Mangini court was discussing the conduct of a lessee, not an owner.” At 345, 383. “[I]t does not make sense to extend the application of this rule and find an owner can never be liable to a successor in interest for nuisance because the owner consented to his own use of the property. Thus a consent defense should not exist in this factual context.” Ibid. That the appellate justices in Newhall understood this distinction, which totally escaped the justices in Beck and the Supreme Court, is tragic error.
DEFENSE OF CUSTOM AND PRACTICE IS IRRELEVANT IN A NUISANCE ACTION
In a negligence action custom is relevant on the issue of standard of care, but negligence has no relevance to a nuisance action. It is for that reason that evidence of custom and practice in the mining industry and AlliedSignal defense that dumping mine tailings on its property was a common practice was irrelevant in this case.
AlliedSignal created the tailings pile and sold it in the 1960s. The nuisance it created was discovered by plaintiffs in 1994 and how, why or the manner in which it was created has nothing to do with the fact that arsenic contaminates the dirt are on their property. Plaintiffs only needed to prove that they suffer from a permanent nuisance and were not required to prove that the arsenic contaminated mine tailings were the result of negligence or intentional torts.
The key to understanding this aspect of nuisance law is that it is the effect of the act itself and not the manner in which it was performed which determines whether activity constitutes a nuisance.
Civil Code 3479 provides “anything which is injurious to health or an obstruction to the free use of property, so as to interfere with the comfortable enjoyment of life or property is a nuisance.” All other code sections on nuisance also are devoid of any reference to the manner in which the nuisance was created, and silent with regard to negligence, fault, intentional tort, or strict liability.
In Shields v. Wondries (1957) 154 Cal. App. 2d 249, 255 the Court expounded on this rule. Although frequently negligence and nuisance coexist, a nuisance and liability for injuries occasioned thereby may exist without negligence. (Curtis v. Kasnter, 220 Cal. 185 [30 P. 2d 26]; Snow v. Marian Realty Co., 212 Cal. 622, 625 [299 P. 720]; Kafka v. Bozio, 191 Cal 746, 748 [218 P. 753, 29 A.L.R. 833].) “A nuisance may not, necessarily grow out of acts of negligence, but may be the result of skillfully directed towards accomplishing the desired end, but which may not have due regard for the rights of others.” At 255. (District of Columbia v. Totten, 5 F. 2d 374, 379 [55 App. D.C. 312, 40 A.L.R. 1461].) [Emphasis added.] At 255.
The rule has been applied in circumstances where the vibrations of an engine lawfully operated in a semi-industrial zone were found to be a nuisance and the court held that the “fact that the plant was properly installed and skilfully [sic] operated gives no right to the respondent to thus invade the rights of appellants.” Fendley v. City of Anaheim (1930)110 Cal. App. 731, 737. Citing Shields, supra, the Court in Sturges v. Charles L. Harney, Inc. (1958) 165 Cal. App. 2d 306, 318 holds that it is well settled in this state that an owner of land may not do even nonnengligent acts on his property with impunity where they create a nuisance as to his neighbor. Defendant apparently disregards the fact that the evidence also establishes his negligence. In this case, it can easily be said that the torts of nuisance and negligence are coexisting and practically inseparable. (Cutler v. City and County of San Francisco, supra.) At 318.
While negligent acts can create nuisances, proving negligence is not required of a plaintiff in a nuisance case. It is for this reason that evidence of the custom and practice in the mining industry is irrelevant and did not provide any defense to AlliedSignal.