SC Supreme Court Opens Door to “Stigma Damages”

In a surprising 3-2 decision, the South Carolina Supreme Court ruled that environmental plaintiffs whose property is not contaminated may nevertheless be able to recover “stigma damages,” which include decreased property values resulting from negative perceptions associated with property that is contaminated or near contaminated property.  In Chestnut v. AVX Corporation (Aug. 5, 2015), the Court reversed the dismissal of a lawsuit which alleged that, even though plaintiffs’ property was not contaminated, it was in such proximity to a contaminated area that it had been devalued.  Based upon legal authorities dating back to the early 1970s, environmental practitioners in South Carolina have long believed that typical causes of action for contamination – trespass, nuisance, strict liability, and negligence – require plaintiffs to allege and prove that their property has been contaminated and that “stigma damages” are not recoverable.  The Chestnut majority ruled, however, that “creation of a factual record will allow us to decide whether to adopt a ‘no stigma damages rule;’ and ‘all stigma damages rule;’ or a modified rule.”  The full decision is available here.