United States: North Carolina General Assembly Limits Nuisance Damages Against Agricultural And Forestry Operations

An Act that was recently passed by the General Assembly has limited the damages private parties can recover against agricultural or forestry operations in civil actions for nuisance claims.

In Session Law 2017-11, the General Assembly added a new section to Article 57 of Chapter 106 of the General Statutes entitled "An Act to Clarify the Remedies Available in Private Nuisance Actions Against Agricultural and Forestry Operations" (the "Act"). The Act specifies the measure of compensatory damages for a nuisance claim based upon the nature of the nuisance (permanent or temporary) and sets limits which are tied to property value.

If the nuisance is classified as permanent and cannot be abated, damages are calculated by the reduction in the fair market value of the claimant's property caused by the nuisance. The Act limits the damages recoverable for a permanent nuisance to the fair market value of the claimant's property. If the nuisance is classified as a temporary nuisance that can be abated, damages are calculated by and limited to the diminution of the fair rental value of the claimant's property caused by the nuisance.

The Act also places limits on subsequent claims by nuisance claimants. It prohibits a previously successful nuisance claimant or his successors from obtaining a subsequent recovery that, when combined with the prior recovery, would exceed the fair market value of the property. This limitation applies regardless of whether the subsequent action was brought against a different defendant than in the prior action.

Parties in a contractual or business relationship with an agricultural or forestry operation are also protected by the new limitations imposed by the Act. Thus, businesses who are working with farming or timber operations could utilize the protections as well.

Tort claims for nuisance are the only cause of action limited by the Act. Claims based upon negligence, trespass, personal injury, strict liability, or other cause of action for tort liability other than nuisance, are exempted from the Act's terms along with requests for injunctive relief and punitive damage claims.

Causes of action filed on or after May 11, 2017 are covered by the Act. Any civil actions containing a nuisance claim which were filed prior to May 11, 2017 are not affected. The initial version of the Act would have applied to pending cases, but it was amended prior to passage after objections were raised regarding the impact on pending cases.

The primary impact of the Act is the elimination of recovery for annoyance, discomfort, fear, anxiety, stress, mental anguish, and other non-economic harms in nuisance claims. Instead, claimants could only recover damages based upon either a diminution in fair market value of real property (permanent nuisance) or diminution in fair rental value of real property (temporary nuisance).

Despite the new limitations on damages for nuisance claims, claimants can still recover damages for annoyance, discomfort and other non-economic injuries caused by agricultural and forestry operations, but must now utilize a trespass claim or other torts. North Carolina courts have recognized the recovery of non-economic damages for trespass in a number of settings. For example, the North Carolina Supreme Court allowed recovery for insult, humiliation, and anguish from unauthorized entry onto land in an attempt to seduce plaintiff's spouse in Brame v. Clark, 62 S.E. 418, 419 (1908), and damages for embarrassment, humiliation and mental anguish resulting from defendant's trespass and desecration of a spouse's grave in Matthews v. Forrest, 69 S.E.2d 553, 556 (1952).

Further, the North Carolina Court of Appeals has recently relied on and favorably cited the Restatement (Second) of Torts in BSK Enterprises, Inc. v. Beroth Oil Company, 783 S.E.2d 236 (N.C. Ct. App. 2016) to determine the appropriate measure of damages for damage to real property. The Court cited the Restatement (Second) of Torts § 929 which contains the following comment, "Discomfort and annoyance to an occupant of the land and to the members of the household are distinct grounds of compensation for which in ordinary cases the person in possession is allowed to recover in addition to the harm in his proprietary interests."

Claimants can still recover non-economic aggravation damages against agricultural or forestry operations based upon a negligence claim, as well. Iadanza v. Harper, 611 S.E.2d 217, 221 (N.C. Ct. App. 2005) ("If plaintiffs prove their claim of negligence at trial, they would be entitled to all damages which proximately flow from this negligence including all physical and mental injuries and pain and suffering. As to the element of damages for pain and suffering: Pain and suffering damages are intended to redress a wide array of injuries resulting from physical pain to anxiety, depression, and the resulting adverse impact upon the injured party's lifestyle.")(internal quotations and citations omitted)(emphasis added).

Going forward, the Act's limits on nuisance actions and emphasis on property valuation will increase litigants' reliance and focus on expert witnesses for appraisals of property value. Selection of a properly qualified appraiser who utilizes the appropriate standards and methodology will be even more important. Further still, the Act's changes will almost certainly lead claimants to develop more creative and enterprising theories for other tort claims, particularly trespass. In addition, courts will probably be called upon to sort out confusion over the Act's vague limitation of damages on subsequent nuisance claims and the appropriate measure of the fair market value of the claimant's property.

Gavin Parsons is a partner in the Raleigh office of Troutman Sanders LLP, and regularly represents clients in all state and federal courts across North Carolina and adjoining states in a variety of industries.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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