Possible foreshadowing in Texas Supreme Court Ruling

In March, we presented a story that involved arguments at the Texas State Supreme Court regarding underground trespassing. While a decision is still pending in that case, the court’s recent ruling on a similar argument may provide insight on future rulings.

On August 22, 2014, the State Supreme Court ruled to overturn trial and appellate courts decisions and reversed the previous ruling which awarded $400,000 to the plaintiff in the matter of Houston Unlimited, Inc. Metal Processing v. Mel Acres Ranch. Mel Acres Ranch, owner of the 155-acre tract of land in Chappell Hill, Texas that is the center of the argument, received complaints in 2007 from a rancher leasing the land regarding deaths and birth defects in calves that were bred on the property. Mel Acres Ranch hired an environmental consultant who found the presence of high levels of chemicals that were attributed to the neighboring facility owned by Houston Unlimited, Inc. Metal Processing. Mel Acres then filed a complaint with the TCEQ against Houston Unlimited. The commission conducted its own research on the ranch property, finding chemical levels in both soil and water samples that exceeded the state action levels, in addition to violations within Houston Unlimited’s facility. Houston Unlimited was cited for “failing to prevent the discharge of industrial hazardous waste into or adjacent to water of the state” and was ordered to stop all discharge and begin clean up.

After the citation, clean-up and implementation of contamination prevention measures on the part of Houston Unlimited, an environmental consultant hired by Mel Acres continued to find high levels of chemicals present on the ranch property. The consultant noted a stock water tank that remained “adversely affected,” deducing that future use of the land had been limited due to the contamination. Mel Acres then sued Houston Unlimited for nuisance, trespass, and negligence, seeking the loss of fair market value for their entire property as damages. The trial court found that Houston Unlimited was not guilty of trespassing or causing injury, but was liable for negligence and awarded Mel Acres $349,312.50 for its loss of market value. The appeals court affirmed that decision, which brought the case before the State Supreme Court.

The state high court’s decision to reverse the previous ruling is based on a lack of evidence supporting Mel Acres claim. Mel Acres case was built on a “stigma” their property suffered after the contamination and subsequent clean up that “permanently impacted” it’s market value. With an expert witness, a licensed real estate appraiser, Mel Acres presented a sales-comparison between their land and two similarly impacted sites. The court found this method flawed, citing that it “failed to account for any differences between the ranch and [the two similarly impacted sites] or any difference between the nature of the contamination of the three properties,” and that the expert offered only an assumption on which to attribute the diminished property value. The state high court then reversed the appellate court’s decision and rendered a “take-nothing” judgment in favor of Houston Unlimited.

While this decision and the still pending Environmental Processing Systems, L.C. v. FPL Farming Ltd. case are built on different arguments, the two situations share striking similarities, leaving one to wonder what impact this decision might have on future rulings from the state high court.

environmental dataEfrain Rodriguez
Research Analyst
Document Research Services

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