Suit over environmental report can go forward

An environmental inspection company that underestimated the amount of hazardous waste on a Columbia tract could be on the hook in a suit brought by the buyer, who relied on the report.
According to an unpublished opinion from the appeals court, the defendant reported evidence of some trash on the property, but said it wasn’t extensive and nothing looked dangerous.
The plaintiff, Newsmall Clemson, LLC, bought the land after the defendant, South Carolina-based Earth Management Systems, Inc., said it didn’t recommend further environmental investigation.
The property is situated near the Clemson Road exit off Interstate 20 in Richland County.
When the plaintiff started to build a road on the parcel, it struck a landfill and then discovered an agreement that had permitted a former owner to operate a dump there. State documents also showed that the property had been home to an asphalt plant.
Further inspections unearthed construction debris, paint cans, oil cans, batteries, tires and medical waste, according to the opinion.
The plaintiff brought claims for negligence, negligent misrepresentation and violation of the Unfair Trade Practices Act.
The trial court granted the defendant a directed verdict on all of the claims.
In a July 31 unpublished decision, the appeals court remanded for trial on two causes of action: negligence and negligent misrepresentation. It let stand the directed verdict on the UTPA claim.
Though lacking force as precedent, the ruling shows what types of evidence will be good enough to let suits proceed against inspection companies that allegedly fail to thoroughly inspect the environmental conditions on real property.
The per curiam opinion is Newsmall Clemson LLC v. Earth Management Systems, Inc. (South Carolina Lawyers Weekly No. 011-149-08, 10 pages).
The defendant’s report stated that “evidence of debris-dumping was observed, but nothing of a hazardous nature was identified, no extensive dumping was observed.”
According to the plaintiff’s allegations, that report proved false.
The plaintiff argued that it put on evidence of the defendant’s breach sufficient to withstand summary judgment on the negligence claim.
The appeals panel agreed.
It pointed to testimony from two experts, including:
* One expert who noted that the defendant’s report revealed evidence of surface landfilling. “Yet,” he said, “it draws the conclusion that no additional work needs to be done, and I don’t think the evidence in the report would indicate that no additional work needs to be done.”
* A second expert who said the defendant “failed to identify recognized environmental conditions on the property, that being the landfill.” He said the defendant should have recommended a more in-depth assessment.
The court said the experts’ testimony supported the plaintiff’s claim that the defendant breached its duty.
“The trial court even acknowledged [the second expert] indicated the duty was breached,” the order states. “In deciding the directed verdict motion, the trial court improperly weighed the evidence. However, the trial court’s duty is not to weigh the evidence or determine the matters of credibility.”
That’s left up to the jury, according to the opinion.
The appeals court also said that there was evidence to support damages. An engineer estimated that it would cost more than $1.6 million to remove the trash.
The plaintiff also presented evidence that it took losses when it had to renegotiate deals with individuals who bought parcels on the tract.
Negligent Misrepresentation
The defendant contended that it offered merely an opinion when it didn’t recommend a further investigation.
The appeals court said that might be true, but the plaintiff’s negligent misrepresentation claim could go forward anyway.
“[W]e find that even if the recommendation was merely an opinion, the phase I assessment does contain factual representations that could support a claim for negligent misrepresentation,” the opinion states.
By Gregory Froom, [email protected]