On Sept. 26, the NAM filed an amicus letter urging the California Supreme Court to review two issues in a case of subsurface trespass resulting from migration of wastewater and the subsequent alleged reduction of water quality in an aquifer. First, even though California has a three-year statute of limitations for actions against permanent trespass, the lower court ruled that this trespass was not permanent, but continuing. Our brief argues that such an interpretation improperly eliminates the statute of limitations defense in cases where subsurface water has been migrating for many years.
Second, even though California law is very clear on the measure of damages for a continuing trespass, providing that a plaintiff may recover “the value of the use of the property” that the defendant gained and the “reasonable cost of repair or restoration of the property to its original condition,” the court of appeals nonetheless allowed additional damages that may include profits enjoyed by the defendant that are directly linked to the trespass. Our brief argues that including profits in the calculation of damages overstates the benefit that a company obtains, with the proper measure of damages for “benefits obtained” being the costs that the company avoided by engaging in the challenged activity. That, combined with the actual damages resulting from the trespass, takes away all incentive for the trespass and provides more than full compensation to the plaintiff. Guidance from the California Supreme Court on both of these issues would substantially aid California landowners and businesses by verifying settled principles, eliminating uncertainty and a jackpot-justice approach to litigation, and satisfying the demands of due process to provide fair notice of the law of damages for trespass.
On Oct. 24, the California Supreme Court denied the petition for review.