In a decision that may reopen the door to significant damages in a California soil and groundwater contamination suit, the Ninth Circuit reversed a trial court’s dismissal of the City of San Diego’s restoration and real estate damages claims stemming from petroleum releases.  People of the State of Calif. v. Kinder Morgan Energy Partners, No. 13-55297 (May 21, 2015).  The Ninth Circuit’s decision revived Plaintiffs’ claims for some $250 million in damages.

Plaintiffs allege Defendants are responsible for petroleum that leaked into soil and groundwater, including an aquifer beneath San Diego’s Qualcomm Stadium.  Plaintiffs’ expert based his restoration damages assessment on the assumption that restoration to background conditions was the proper cleanup standard.  This, the trial court found, rendered the expert’s opinion irrelevant and unreliable.  The Ninth Circuit disagreed, finding that any fault in the expert’s assumptions on baseline conditions goes to weight and impeachability, not admissibility. 

The trial court also found Plaintiffs’ assessment of real estate damages of the stadium property was impermissibly based on the hypothetical highest and best use of the property, finding instead the proper measure of such damages is the rental value of the property as it exists, as a stadium.  The Ninth Circuit, though, held that California law permits real estate damages arising from nuisance and trespass to be proved based on a hypothetical higher use of the property.  Plaintiffs in this case argued that could include a mixed-use development, thereby allowing for a significantly larger potential damages award.