McCormick et al v. Halliburton Company et al

Filing 173

ORDER granting 118 defendant Halliburton Energy Services, Inc.'s Motion for Judgment on the Pleadings as to Plaintiffs' Claim for Property Damages Based on "Stigma" or "Threatened" Harm and dismissing any nuisance clai ms brought by plaintiff(s) based solely on a property's diminution in value as a result of its proximity to the contamination or the threat of future contamination (as more fully set out in order). Signed by Honorable Vicki Miles-LaGrange on 3/31/2014. (ks)

IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF OKLAHOMA
MITCHELL MCCORMICK, et al.,
Plaintiffs,
vs.
HALLIBURTON COMPANY and
HALLIBURTON ENERGY
SERVICES, INC.,
Defendants.

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Case No. CIV-11-1272-M

ORDER
Before the Court is defendant Halliburton Energy Services, Inc.’s (“HESI”) Motion for
Judgment on the Pleadings as to Plaintiffs’ Claim for Property Damages Based on “Stigma” or
“Threatened” Harm, filed June 14, 2013. On July 3, 2013, plaintiffs filed their response. On July
16, 2013, an amicus curiae brief was submitted on behalf of plaintiffs in related cases that are
currently pending before this Court.1 On July 22, 2013, HESI filed its reply. Based upon the
parties’ submissions, the Court makes its determination.
I.

Introduction
HESI owns and operates a facility on Osage Road in Duncan, Oklahoma (the “Site”). The

Site was used to conduct various research and development activities, including cleaning U.S.

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The related cases are (1) Bickerstaff v. Halliburton Energy Services, Inc., Case No. CIV-111305-M; (2) Eldridge v. Halliburton Energy Services, Inc., Case No. CIV-11-1306-M; (3) Smith v.
Halliburton Energy Services, Inc., Case No. CIV-11-1307-M; (4) Booth v. Halliburton Energy
Services, Inc., Case No. CIV-11-1308-M; (5) May v. Halliburton Energy Services, Inc., Case No.
CIV-11-1309-M; (6) Reyes v. Halliburton Energy Services, Inc., Case No. CIV-11-1310-M; (7)
Campbell v. Halliburton Energy Services, Inc., Case No. CIV-11-1311-M; (8) Southerland v.
Halliburton Energy Services, Inc., Case No. CIV-11-1312-M; (9) Jones v. Halliburton Energy
Services, Inc., Case No. CIV-11-1322-M; and (10) Cheek, et al. v. Halliburton Energy Services, Inc.,
Case No. CIV-13-116-M.

Department of Defense missile motor casings and recycling stainless steel fuel rod racks from a
Nebraska nuclear power plant. HESI began using the Site in 1962 and continued disposal activities
until approximately 1991. The primary hazardous waste that was disposed of at the Site was
ammonium perchlorate. Investigation at the Site has confirmed that ammonium perchlorate has
polluted the soils and subsurface of the Site and has impacted the groundwater underlying the Site.
On October 31, 2011, plaintiffs filed the instant action. Plaintiffs allege that the ammonium
perchlorate in the groundwater migrated from the Site and into the adjacent neighborhood where it
has impacted their properties. In their motion for class certification, plaintiffs propose:
certification of a class of landowners whose real property rights have
been injured by Halliburton’s wrongful practices described in the
First Amended Complaint (and herein), as a result of the migration
of perchlorate contaminated groundwater from the Site. Plaintiffs
propose that the class, defined below, be certified for liability
determination.
Based on available information and data, Plaintiffs seek to
certify two subclasses. The first class, referred to herein as the
“Plume Class” consists of the owners of those parcels of property
indicated in the Impact Map . . . that currently suffer from perchlorate
contaminated groundwater from Halliburton’s Site operations,
excluding any property owners that, as part of any settlement, have
released their property damage claims against Halliburton.
The second subclass of class members are those with property
that is not currently suffering from perchlorate groundwater
contamination, but, due to their proximity to such contamination,
their properties are threatened by the contamination and they have
suffered diminished property value. This subclass is delineated . . .
as the “Threatened Class.”
Plaintiffs’ Brief in Support of Their Motion for Class Certification [docket no. 97] at 7-8.2

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Pursuant to the parties’ agreement to stay any ruling by the Court on plaintiffs’ Motion for
Class Certification, the Court has not ruled on plaintiffs’ Motion for Class Certification and, thus,
no class has been certified in this case.
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HESI now moves this Court for judgment on the pleadings as to plaintiffs’ claim for property
damages based solely on proximity to contamination or the threat of future contamination.
Specifically, HESI is seeking judgment on the pleadings on the property damage claims asserted by
plaintiff Dwight Sanford, whose property plaintiffs concede is not contaminated, and on all claims
sought to be asserted by the proposed “Threatened Class.”
II.

Standard of Review
When reviewing a motion for judgment on the pleadings under Rule 12(c), the court applies

the same standard that applies to a Rule 12(b)(6) motion. Nelson v. State Farm Mut. Auto. Ins. Co.,
419 F.3d 1117, 1119 (10th Cir. 2005).
To survive a motion to dismiss, a complaint must contain sufficient
factual matter, accepted as true, to state a claim to relief that is
plausible on its face. A claim has facial plausibility when the
plaintiff pleads factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct
alleged. The plausibility standard is not akin to a “probability
requirement,” but it asks for more than a sheer possibility that a
defendant has acted unlawfully. Where a complaint pleads facts that
are merely consistent with a defendant’s liability, it stops short of the
line between possibility and plausibility of entitlement to relief.
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal quotations and citations omitted). Further “[a]
federal court sitting in diversity must apply the law of the forum state, in this case Oklahoma, and
thus must ascertain and apply Oklahoma law with the objective that the result obtained in the federal
court should be the result that would be reached in an Oklahoma court.” Wood v. Eli Lilly & Co.,
38 F.3d 510, 512 (10th Cir. 1994).
III.

Discussion
HESI asserts that as a matter of law, no cognizable claim lies for diminution in property

value based solely on proximity to contamination or the threat of future contamination. Plaintiffs
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contend that where a property is actually threatened by contamination, a cause of action lies.
Specifically, plaintiffs assert that Oklahoma law recognizes claims for property owners that are
threatened by a nuisance, irrespective of any physical damage to the property, and that Oklahoma
law has long recognized that nuisance claims do not require an actual physical invasion (a
“trespass”) onto a plaintiff’s property.
Oklahoma statutorily defines nuisance as follows:
A nuisance consists in unlawfully doing an act, or omitting to
perform a duty, which act or omission either:
First. Annoys, injures or endangers the comfort, repose, health, or
safety of others; or
Second. Offends decency; or
Third. Unlawfully interferes with, obstructs or tends to obstruct, or
renders dangerous for passage, any lake or navigable river, stream,
canal or basin, or any public park, square, street or highway; or
Fourth. In any way renders other persons insecure in life, or in the
use of property, provided, this section shall not apply to preexisting
agricultural activities.
Okla. Stat. tit. 50, § 1. Further, the Oklahoma Environmental Quality Act provides that “[i]t shall
be unlawful for any person to cause pollution of any waters of the state or to place or cause to be
placed any wastes in a location where they are likely to cause pollution of any air, land or waters of
the state. Any such action is hereby declared to be a public nuisance.” Okla. Stat. tit. 27A, § 2-6105(A). Additionally, the Oklahoma Supreme Court has held:
the term “nuisance” signifies in law such a use of property or such a
course of conduct irrespective of actual trespass against others, or of
malicious or actual criminal intent, which transgresses the just
restrictions upon use or conduct which the proximity of other persons
or property imposes.
Briscoe v. Harper Oil Co., 702 P.2d 33, 36 (Okla. 1985) (emphasis added).

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Accordingly, based upon Oklahoma law, the Court finds that no actual trespass – physical
invasion of property – is required to state a claim for nuisance. Thus, the Court finds that no actual
contamination of a plaintiff’s property is required to state a claim for nuisance. This finding,
however, does not end the Court’s analysis. The Court must now determine what is required to state
a claim for nuisance if there has been no actual contamination of a plaintiff’s property.
It is clear under Oklahoma law that a nuisance claim may be stated based upon wrongful
interference with the use or enjoyment of a person’s rights or interests in land. See Nichols v. MidContinent Pipe Line Co., 933 P.2d 272, 276 (Okla. 1996). In their response, plaintiffs state that they
are seeking damages for the nuisance that HESI has caused by creating a reasonable threat of
contamination which has substantially affected plaintiffs’ use and enjoyment of their property.
Further, plaintiffs assert that they can show impacts on the use and enjoyment of their properties
even beyond diminished property values.
HESI asserts that based upon plaintiffs’ motion for class certification, a claim for
interference with loss of use and enjoyment of property is not one which plaintiffs are pursuing on
a class basis. HESI, therefore, contends that this Court should disregard any argument regarding the
ability of plaintiffs to show loss of use and enjoyment of property. HESI further asserts that to the
extent plaintiffs may be making such a claim individually, a claim for loss of use and enjoyment is
fatally flawed. Specifically, HESI contends that under Oklahoma law, a plaintiff cannot recover
property damages for hypothesized future harms, regardless of whether or not those fears are entirely
unfounded or likely to materialize.
Having carefully reviewed the parties’ submissions, the Court finds that a claim for
interference with loss of use and enjoyment of property based upon threatened contamination of a

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plaintiff’s underground water is not barred as a matter of law. The Court finds that whether a
plaintiff could maintain such a claim would be a fact specific determination. Specifically, whether
such a claim could be maintained would depend on facts addressing the reasonableness of the
alleged loss of use and enjoyment, including, but not limited to, how close the contamination is to
a plaintiff’s property, the direction the contaminated groundwater is moving, the uses of the specific
property, etc. Accordingly, the Court finds that judgment on the pleadings as to such a claim would
be inappropriate. Additionally, the Court finds for purposes of ruling on the instant motion, it is not
necessary to determine whether plaintiffs are pursuing a claim for interference with the loss of use
and enjoyment of property on a class basis. If they are, the propriety of class certification of such
a claim will be determined when the Court rules on plaintiffs’ motion for class certification.
Thus, the only remaining issue for purposes of the instant motion is whether plaintiffs can
state a nuisance claim based solely on a property’s diminution in value as a result of its proximity
to the contamination or the threat of future contamination. Contrary to plaintiffs’ assertion, there
is no Oklahoma law directly on point for this narrow, specific issue. Plaintiffs rely on N.C. Corff
P’ship, Ltd. v. OXY USA, Inc., 929 P.2d 288 (Okla. Civ. App. 1996) for their assertion that
diminished property value alone is legally sufficient to support a nuisance claim. In N.C. Corff, the
Oklahoma Court of Civil Appeals states: “[d]iminished value has been recognized by the Oklahoma
Supreme Court as legally sufficient to support a nuisance claim, particularly when accompanied by
physical injury.” Id. at 294 (citing City of Shawnee v. Bryant, 310 P.2d 754 (Okla. 1957); McKay
v. City of Enid, 109 P. 520 (1910)). However, the plaintiffs in N.C. Corff alleged that the
defendant’s oil and gas operations resulted in elevated levels of chloride compounds in the
groundwater underlying the land owned by the plaintiffs. Thus, the statement in N.C. Corff that

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diminished property value alone is legally sufficient to support a nuisance claim is mere dicta.
Additionally, the cases cited by the court in N.C. Corff do not involve circumstances where
diminished value alone was found to be legally sufficient to support a nuisance claim. In City of
Shawnee, the plaintiffs alleged that the defendant’s operation of a sewage disposal plant caused foul
and noxious odors to permeate the plaintiffs’ home and property, and in McKay, the Oklahoma
Supreme Court held that the plaintiff failed to show that he had suffered any special injury from the
alleged public nuisance. Therefore, the Court finds there is no Oklahoma authority on the specific
issue facing this Court.
While Oklahoma has not ruled on this issue, other jurisdictions have consistently and
overwhelmingly refused to recognize a nuisance cause of action based solely on diminished property
value. For example, in Adkins v. Thomas Solvent Co., 487 N.W.2d 715, 725 (Mich. 1992), the
Supreme Court of Michigan held that an allegation of property depreciation alone does not set forth
a cognizable claim in private nuisance. The Adkins court found:
[t]he crux of the plaintiffs’ complaint is that publicity concerning the
contamination of ground water in the area (although concededly not
their ground water) caused diminution in the value of the plaintiffs’
property. This theory cannot form the basis for recovery because
negative publicity resulting in unfounded fear about dangers in the
vicinity of the property does not constitute a significant interference
with the use and enjoyment of land.
Id. at 306. Additionally, the court stated:
the modern formulation of nuisance in fact, acknowledges changing
conditions by declining to recognize a cause of action where damage
and injury are both predicated on unfounded fear of third parties that
depreciates property values. The rationale may be expressed by
observing that reasonable minds cannot differ that diminished
property value based on unfounded fear is not a substantial
interference in and of itself. Thus, in rejecting a claim that tort
liability could be based on the creation of fear that depreciates
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property values, one federal district court observed that the theory
was based on “a public reaction which is conjectural, transitory and
ephemeral.” Good Fund, Ltd – 1972 v. Church, 540 F. Supp. 519,
534 (D. Colo. 1982), rev’d on other grounds sub nom McKay v.
United States, 703 F.2d 464 (CA 10, 1983).
Id. at 312-13. Finally, the Supreme Court of Michigan aptly stated:
If any property owner in the vicinity of the numerous hazardous
waste sites that have been identified can advance a claim seeking
damages when unfounded public fears of exposure cause property
depreciation, the ultimate effect might be a reordering of a polluter’s
resources for the benefit of persons who have suffered no cognizable
harm at the expense of those claimants who have been subjected to
a substantial and unreasonable interference in the use and enjoyment
of property.
Id. at 318-19.
The Supreme Court of Kansas has also ruled on this issue. In Smith v. Kan. Gas Serv. Co.,
169 P.3d 1052 (Kan. 2007), the Kansas Supreme Court held:
to maintain an action for nuisance, a landowner must establish an
interference with the owner’s use and enjoyment of the property
which is separate and distinct from the claim that the property’s value
has diminished because of marketplace fear or stigma.
Id. at 1062. In reaching this holding, the court noted:
[i]t appears that the majority of other jurisdictions that have
considered the issue hold that a nuisance claim requires a physical
presence or an interference with the plaintiff’s use and enjoyment of
the real property which is separate and apart from the diminution of
the property’s market value.
Id. at 1061 (citations omitted).
Having carefully reviewed the parties’ submissions and the case law on this issue, the Court
finds that the Oklahoma Supreme Court would follow the overwhelming majority of jurisdictions,
for the reasons expressed by those courts and set forth above, and would find that a plaintiff can not

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maintain a nuisance claim based solely on the claim that the plaintiff’s property value has
diminished because of marketplace fear or stigma.3 To the extent that any of the plaintiffs, or any
proposed class of plaintiffs, in the instant action are asserting such a claim, the Court finds that HESI
is entitled to judgment on the pleadings as to that claim.
IV.

Conclusion
Accordingly, for the reasons set forth above, the Court GRANTS HESI’s Motion for

Judgment on the Pleadings as to Plaintiffs’ Claim for Property Damages Based on “Stigma” or
“Threatened” Harm [docket no. 118] and DISMISSES any nuisance claims brought by plaintiff(s)
based solely on a property’s diminution in value as a result of its proximity to the contamination or
the threat of future contamination.
IT IS SO ORDERED this 31st day of March, 2014.

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“Where no controlling state decision exists, the federal court must attempt to predict what
the state’s highest court would do.” Wankier v. Crown Equip. Corp., 353 F.3d 862, 866 (10th Cir.
2003).
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