Does contamination mean a reduction in property value?
Is benzene under your home bad? Depends.
Earlier this year, the Seventh Circuit Court of Appeals heard the case of Parko vs. Shell Oil, 739 F.3d 1083. Although this is essentially a loss of property value class action case, Judge Posner gave us several of his patented pithy sayings, this time about toxic torts.
In Parko, a Shell refinery operated for ninety years across the street from the Plaintiffs’ subdivision. Benzene was found under the homeowners’ property although the groundwater was not being used as a drinking water supply. Plaintiffs’ sued as a class for the loss of their property values.
Cutting to the chase, Judge Posner observed that:
There are many things commonly found in soil beneath rural or suburban houses that homeowners would very much like not to enter their homes (such as earthworms, fungi, ants, beetles, slugs, radon, chemical residue, thousands of different types of microbes – and groundwater), but as long as there is no danger of such unwanted visitors their underground presence should not affect property values. Benzene in the water supply is one thing; benzene in groundwater that does not feed into the water supply is quite another. (emphasis added)
The Seventh Circuit sent this case back to the trial court to take evidence on these issues before granting a class certification. Most importantly, this gives us insight into the Seventh Circuit’s analysis of whether property values are affected simply because the groundwater is contaminated.
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