Stigma Damages: Defining the Appropriate Balance between Full Compensation and Reasonable Certainty
![handle is hein.journals/sclr52 and id is 1049 raw text is: STIGMA DAMAGES: DEFINING THE
APPROPRIATE BALANCE BETWEEN FULL
COMPENSATION AND REASONABLE CERTAINTY
I. INTRODUCTION
Consider the following scenario: You own property situated near a gas
station. Some of the gas station's underground storage tanks leak, dispersing
gasoline on and around your property. The gas station owner begins
remediation efforts, and eventually all of the gasoline is removed from your
property. However, despite full remediation, you and your neighbors have
experienced a diminution in property value. Buyers are afraid to purchase your
formerly contaminated property, and this fear has reduced the value of your
property. Your property has been stigmatized.
In the past fifteen years, plaintiffs have increasingly sought to recover
damages for the diminution in their property value caused by stigma.' While
the vast majority of stigma damage claims arise from contamination cases
based on common law trespass or nuisance theories, courts have addressed the
issue of stigma damages in cases regarding CERCLA,2 defective construction,3
termite damage,4 and deceptive trade practices.' The variety of claims, along
1. See Alex Geisinger, Nothing but Fear Itsef. A Social-Psychological Model of Stigma
Harm and Its Legal Implications, 76 NEB. L. REv. 452,457 (1997).'
2. Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C.
§§ 9601-9675 (1994); see Scribner v. Summers, 138 F.3d 471, 473 (2d Cir. 1998) (noting
uncertainty of New York law on stigma damage and expressing desire to certify question to state
court); In re Paoli R.R. Yard PCB Litig., 35 F.3d 717, 798 (3d Cir. 1994) (formulating three-part
test for recovery of stigma damages); Berry v. Armstrong Rubber Co., 989 F.2d 822, 829 (5th
Cir. 1993) (denying recovery of stigma damages in the absence of physical harm to the
property); Rhodes v. County ofDarlington, 833 F. Supp. 1163,1180 (D.S.C. 1992) (holding that
property damage is not a response cost under CERCLA).
3. See Aas v. Superior Court, 75 Cal. Rptr. 2d 581, 604-05 (Ct. App. 1998) (holding
petitioner's claim for stigma damages generic and speculative where petitioner offered evidence
that homes with construction defects generally suffer a 2.8% decrease in value); McAlonan v.
United States Home Corp., 724 P.2d 78,79 (Colo. Ct. App. 1986) (affirming lower court's jury
instruction to award damages for the reasonable cost of repairing the property, together with
the decrease in market value, if any,.. . as repaired); Pelletier v. Pelletier Dev. Co., No. CV
940463671S, 1996 WL 166675, at*5 (Conn. Super. CL Mar. 14, 1996) ([T]he proper measure
of damages is cost of repair plus the 'stigma' factor.); Anderson v. Bauer, 681 P.2d 1316,1324
(Wyo. 1984) (awarding damages for diminution in value caused by public awareness of water
damage of the property).
4. See Horsch v. Terminix Int'l Co., 865 P.2d 1044,1049 (Kan. Ct. App. 1993) (affirming
lower court's award of damages for diminution in property value based on stigma of termite
damage); Tudor Chateau Creole Apts. P'ship v. D.A. Exterminating Co., 691 So. 2d 1259, 1265
(La. Ct. App. 1997) (affirming trial court's award of damages for both cost of repairs and
diminution in value and acknowledging that the total structural damage to the property is
unknown and must, by law, be passed on to any purchaser); Terminix Int'l, Inc. v. Lucci, 670
S.W.2d 657, 663-64 (Tex. Ct. App. 1984) (affirming lower court's award of damages for cost
of repair and diminution in value based on evidence proving the difficulty of ascertaining the
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Stigma Damages: Defining the Appropriate Balance between Full Compensation and Reasonable Certainty
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