On December 14, 2012, the Texas Supreme Court issued an opinion holding that a nuisance claim based on odors from a natural gas compressor station could be “revived” when the odors intensified during the applicable statute of limitations period. See Natural Gas Pipeline Company v. Justiss, 10-0451 (Tex. Dec. 14, 2012). The Court reached a different conclusion on damages, however, finding that the homeowners’ testimony regarding the decrease in their property values was fatally speculative because it lacked any factual basis and, thus, remanded the case back to the trial court for a new trial on liability and damages. Despite being somewhat unfavorable on the statute of limitations issue, the decision is important because the Court held for the first time that landowner valuation testimony is subject to similar standards of evidence as expert opinion testimony.

Regarding the statute of limitations, nearby property owners formally complained of odors from the gas compressor station dating back to 1994, but did not file suit until 1998, after the Texas Commission on Environmental Quality issued a citation for a Category 5 (the most severe) odor violation. The station’s owner argued that the two-year statute of limitations applicable to permanent nuisance violations barred the homeowners’ claims because they first accrued prior to 1996. The homeowners, however, successfully contended that the odors worsened in 1998, and thus that their nuisance claim was “revived.”

Regarding damages, the homeowners’ relied on the “Property Owner Rule,” which allows property owners to provide expert testimony as to the market value of their own property, and gave various accounts of how much their property values had decreased due to the noise and odor emanating from the compressor station. For instance, when asked about the decrease in value of his property, one homeowner, William Justiss, testified: “I don’t know. It’s a hard thing for me to say because I never ever thought in my mind that it was worth what the price of land is bringing now . . . I don’t know. I don’t know. I’m going to say probably across the whole acreage $1250 [per acre].” Reversing the court of appeals, the Supreme Court found that none of the homeowners’ testimony provided adequate evidence of diminished market value. The Court also noted in closing that “the jury was correctly instructed to limit its nuisance finding to conditions arising from the station’s operation, not merely its presence,” suggesting that aesthetics could not properly form the basis of a nuisance claim against the facility.

A copy of the opinion is available here. If you have questions related to the opinion, please contact any of the lawyers listed above.