The state’s Supreme Court justices on Thursday appeared skeptical of Myrtle Beach property owners’ plans to sue AVX Corp. over groundwater pollution that is near – but hasn’t directly impacted – their land, although a lawyer representing those owners said it is too early in the legal process to dismiss their claims.
Surfside Beach lawyer Gene Connell told the justices that Circuit Court Judge Benjamin Culbertson improperly dismissed the claims because he refused to hear evidence that the owners’ property values have decreased and that bank loans have been denied due to the nearby pollution. Connell wants the state Supreme Court to send the case back to the circuit court for further consideration.
AVX lawyer Evan Slavitt, however, told the justices that the property owners don’t have a case and should not be allowed to sue the company for nuisance simply because the stigma of nearby pollution has hurt their land values.
“Fear itself is not enough, there has to be an actual loss of use or enjoyment of the property that is interfered with,” said Slavitt, the company’s vice president for business and legal affairs. “Diminution in value is not a nuisance in itself.”
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Connell represents dozens of property owners near the AVX plant on 17th Avenue South in Myrtle Beach, most of them living above a large but narrow underground plume of groundwater contaminated with trichloroethylene, an industrial degreaser that can cause cancer and other health problems.
AVX admits it caused the pollution and those property owners with contaminated land are continuing their class-action lawsuit against the electronics manufacturer. The only property owners affected by Thursday’s hearing are those living near, but not directly on, the pollution.
Justice Kaye Hearn appeared to agree that those property owners will have a difficult time proving a nuisance claim.
“The only damage would probably be the public’s misperception that the property is not worth what it used to be,” Hearn said. “It seems so highly speculative to me.”
Chief Justice Jean Toal asked whether S.C. law doesn’t requires a higher standard for nuisance claims than mere stigma.
“Doesn’t our law require more than to say, ‘It’s [pollution] close, therefore diminution of value’?” Toal said. “What do we have to hang our hat on that talks about the specific enjoyment of property and diminution of value?”
Connell told the justices that diminution is all that has to be alleged at this stage of the lawsuit and that further evidence will be presented as discovery takes place. Connell said Culbertson dismissed the claims prematurely, without considering evidence supporting his clients’ position. Such dismissals during the discovery process are rare under S.C. law.
Justice Donald Beatty appeared to side with Connell, saying an argument can be made that owners living near the pollution have had “loss of use” of their property if banks are refusing to lend money to them based on the contamination. Among the evidence Culbertson declined to consider was a letter from a Myrtle Beach financial institution that denied an applicant’s loan request because of the nearby pollution.
“If you have a leaking roof and you can’t get it fixed, isn’t that a loss of use?” Beatty said.
Other justices, however, said allowing such stigma damages could open a Pandora’s box of legal claims.
“Where would we draw the line?” asked Hearn, who lives in Horry County. “Could ultimately everyone in Myrtle Beach sue?”
Justice John Kittredge said he also worries about how the court could determine where the cutoff point is for such damages.
“As a court, how do we draw that line going forward?” Kittredge said.
Connell said such questions would have to be handled on a case-by-case basis with reliance on expert testimony.
The state Supreme Court isn’t expected to issue an opinion on the AVX case for at least several weeks. Regardless of the outcome of Thursday’s hearing, however, the class-action lawsuit involving those people whose property is contaminated will continue in circuit court. No trial date is scheduled.
The class-action lawsuit is one of three lawsuits AVX has faced over the TCE pollution since its extent was discovered in 2006. In the first lawsuit, heard in federal court, AVX agreed half-way through a trial to a confidential settlement with adjacent property owner Horry Land Co. A jury in a second lawsuit last year awarded $750,000 in actual and punitive damages to the developers of a planned condominium project that was scrapped because of the pollution. AVX later agreed to a confidential settlement in that case and the jury’s verdict was never entered.
The pollution stems from AVX’s use and handling of TCE during the 1970s and 1980s, and its migration through the groundwater in a narrow swath of Myrtle Beach has taken decades to occur. Court documents and testimony show AVX officials knew in the 1980s that the pollution was moving from its property to the adjacent neighborhood, but kept that information hidden from regulators and politicians. The company finally admitted to the pollution in 1995, but told regulators it was limited to the AVX site. Groundwater testing in 2006 showed high levels of TCE had moved through groundwater to the neighborhood.
AVX – which moved its world headquarters from Myrtle Beach to Greenville in 2009 – is paying to clean up the pollution using a process called enhanced reductive dechlorination, in which molasses is injected into the groundwater. The molasses creates bacteria that eat the TCE, breaking it down into harmless matter.
Experts disagree about the amount of time such a cleanup will take. AVX consultants say the TCE can be removed within five years, while others say it can take decades to reduce the pollution to federal standards. The pollution is not considered a health hazard because the groundwater is not a drinking water source.