Lachenmeier, Enloe & Rall - February, 2004 Publication

IF YOU SPRAY, WHAT WILL YOU PAY?

One of the most important issues that arises in a pesticide spray case is how exactly should the claimant’s damages, if any, be measured. As with many things in the law, the answer is “it depends.” What it depends upon is the nature of the damage to claimant’s property. If the damage is considered “permanent,” there is one measure of damages. If the damages are only “temporary,” the measure of damages is different. (This damages analysis applies in many situations involving damage to real property separate and apart from a pesticide spray case.)

However, just to throw a little uncertainty into the whole analysis, the court in Oregon Mutual Fire Insurance Co. V. Mathis, 215 or 218, 223, 334 P.2d 186 (1959), stated:

While the fundamental rule of law is to award compensation, yet rules for ascertaining the amount of compensation to be awarded are formed with reference to the just rights of both parties, and the standard fixed for estimating damages ought to be determined not only by what might be right for an injured person to receive in order to afford just compensation, but also by what is just to compel the other party to pay.

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It appears that, since the allowance of damages is to award just compensation without enrichment, there is no universal test for determining the value of property injured or destroyed and that the mode and amount of proof must be adapted to the facts of each case.

The court went on to say that it is important to not only look at what is reasonable for the claimant to receive by way of compensation but also to examine what is just to compel the other party to pay.

A good example of the equitable notion of the measure of damages would be in the pesticide spray arena. By way of example, lets say we have a nursery that grows ornamental shrubs and flowers and had been in business for 20 years. During the course of that 20 years, the nursery mostly operated at a loss. A neighbor sprays a pesticide which the nursery claims drifted and damaged most, if not all, the shrubs and flowers at the nursery. The nursery now wants to be compensated for the replacement of every single shrub and flower at the nursery. The amount to replace the shrubs and flowers, some of which are more than 10 years old, far exceeds the amount the nursery would ever earn. Should a nursery which made very little money be compensated hundreds of thousands of dollars because it claims its ornamental flowers and shrubs have been damaged? Or should the damages be limited to lost profits which would be minimal? Or should it receive lost profits and the diminution in value of the property as a whole versus the cost to replace all the plants on at the nursery? Based upon the Oregon Mutual case, the court should look at the equities involved. The claimant should not receive a windfall – all he is entitled to is to be made whole.

To help determine what would be fair compensation in the above scenario, we need to look at whether the damages are “permanent” or “temporary.” Given the lack of case law addressing whether damages are permanent or temporary when property has been harmed due to pesticides, it is difficult to predict how a court would rule on this issue. However, the case law that exists provides us with some guidance.

The Measure Of Damages When The Damage To Claimant’s Property Is “Permanent”

If the damage to a claimant’s property is considered “permanent,” the claimant is entitled to recover the diminution in value of his property. In Hudson v. Peavey Oil Co., 279 Or. 3, 10, 566 P2d 175 (1977), the court discussed what it takes for damage to property to be permanent:

Injury to real property need not be permanent in the sense that it will last forever in order to justify the use of the diminution of value measure of damages. It is enough that the injury be of a kind that makes it appropriate to consider the owner’s loss in terms of the reduced value of the property rather than in terms of the cost of restoring it to its original condition. Thus, where a pipe line company has wrongfully allowed oil to escape into a field for a number of years until the oil evaporates, the owner is entitled to recover for the lessening of the value of the land. Such a condition though not permanent, would affect the offer of a reasonable purchaser.

In Hudson, the damage to plaintiffs’ property was deemed to be permanent. The defendant’s underground gasoline tank leaked and caused part of plaintiffs’ property to become uninhabitable and an odor to permeate a portion of plaintiffs’ office building. These problems would likely persist for an undetermined but significant period of time. In determining that the damage was permanent, the court also took into account the fact that “the property value to a prospective purchaser would be significantly affected.”

In pesticide spray cases, the damages most likely will involve growing crops or vegetation of some sort. There are two cases in Oregon that address whether damage caused to growing crops is permanent or temporary- Furrer v. Talent Irrigation Dist., 258 Or 494, 466 P2d 605 (1970) (pear orchard) and Norwood v. Eastern Oregon Land Co, 139 or 25, 5 P2d 1057 (1931) (alfalfa and perennial grasses). In Furrer, the court concluded that the damage to the pear orchard was “permanent.” The court did not provide any analysis as to why it came to that conclusion but simply held that the trial court was correct in determining that the proper measure of damages was the diminution of value. In Norwood, the court did not decide the issue but instead held that the court did not err when it accepted plaintiff’s computation of damages (i.e. cost of replacement) because it was a lot less than if the damages were based on a diminution of value (it was not at all clear why defendant wanted to use diminution of value if it was more than what plaintiff’s evidence supported).

Given the fact that the Furrer court determined that the damages to the pear orchard were permanent, a court may determine that property damaged by pesticides is permanent. However, many plants will outgrow the effects of pesticide applications. In our above fact scenario involving the nursery, whether the damages are permanent may depend upon whether the shrubs can outgrow the damages. If not, then based upon Furrer, the damage will likely be deemed permanent. Accordingly, the proper measure of damages would be the diminution in value of the nursery.

So how do you measure the diminution of value of someone’s property? Typically, it is determined by looking at the value of the property immediately before and the value of the property immediately after the damage causing event. However, if the damage to the property is on-going, such as when water continually is draining onto the property, the proper measure of damages would be to look at the value of the property before the damage causing event and the value of the property at the time of trial. In Furrer, defendant’s canals leaked water causing many of plaintiff’s pear trees to die. The court held that the proper measure of damages was the value of the property prior to when the water started leaking and the value of the property at the time of trial instead of immediately after the leaking began. In so holding, the court stated “the diminution in the value of the land was gradual and incremental, no part of which was readily measurable at any particular time.”

Determining the value of the property will in almost all cases require you to hire the services of a certified appraiser. Make sure the appraiser you retain has experience with the type of property involved, e.g. farm, residential property, industrial property etc. However, remember that the courts do allow a landowner to testify as the value of his property and do not require expert testimony.

The Measure Of Damages When The Damage To Claimant’s Property Is “Temporary”

If the damage to claimant’s property is “temporary” or is “reasonably susceptible of repair,” damages are measured by the loss of use or rental value doing the period of time the property was damaged or the cost of restoration/repair. Depending upon the circumstances, a claimant may be able to recover both loss of use and the cost of restoration. However, the cost of restoration cannot be used where the cost of restoring the property exceeds the value of the property or where restoration is impracticable. For example, in Olds v. Von Der Hellen, 127 Or 276, 263 P 907 (1928), the issue was how much plaintiff should be compensated for the loss of a 10 year old railroad depot that was no longer being used by the railroad and there was no evidence that the depot would ever be used for railroad purposes again. The evidence was that it would cost $5,000 to replace the depot (remember this is 1928 we are talking about). The court held that given the fact that prior to the depot’s destruction it had limited uses, the value of the depot just prior to the time of the fire would be the proper measure of damages.

In the situation involving the nursery, if the plants can outgrow the effects of the pesticide application or if the damaged portions can be pruned out and the shrubs left alone for a few years to recover, the damages may well be considered to be “temporary.” If so then the claimant should be allowed to recover for loss of use (which would be lost profits) and the extra cost incurred to take care of the damaged plants while they recover. If the parties cannot agree, the jury may have to determine what will happen to the plants in the future (i.e. will they recover or not) before knowing which measure of damages to apply.

Always keep in mind the holding in the Oregon Mutual case. Based upon that holding, the claimant should not be able to recover more than the property was worth prior to the tortuous event no matter whether the damages are deemed to be permanent or temporary. In addition, do not forget that the claimant has a duty to mitigate his damages. A claimant is not entitled to recover for losses which could have been prevented by reasonable efforts on his part.

If you have any questions, please feel free to contact the authors: Rudy Lachenmeier (Rudy@lerlaw.com) and Lori DeDobbelaere (Lori@lerlaw.com) at 503-768-9600.