April 25, 2017. Two weeks ago, the N.C. House quickly approved a bill limiting the money damages available to a plaintiff who wins a nuisance lawsuit against an agricultural or forestry operation. According to the bill title, House Bill 467 “clarifies” the compensation available to a person whose property use has been negatively affected by agricultural or forestry activities.
The backstory. In 2014, multiple nuisance lawsuits representing hundreds of North Carolina plaintiffs were filed against Murphy Brown LLC (the grower subsidiary of Smithfield Foods) in federal court. The plaintiffs allege that odors, ammonia emissions, pests and other conditions associated with nearby swine farms negatively affect the use of their property. A 2015 Charlotte Observer story provides a good overview of the claims. The nuisance cases allege many of the same problems described in a separate civil rights complaint concerning N.C. swine farms filed in 2014. (That complaint remains under investigation by the U.S. Environmental Protection Agency; see a previous post for more on the environmental justice complaint and EPA’s preliminary response.)
H 467 limits compensation available to a person who successfully proves an agricultural or forestry operation has created noxious conditions that interfere with use of their property. As originally introduced, the bill limited compensation available in both pending and future lawsuits. In a letter to the News and Observer, Rep. Jimmy Dixon described the bill as a necessary response to greedy lawyers who “want to sue farmers for outrageous sums without having to prove real damages”. Although more broadly worded, H 467 clearly responded to the pending nuisance lawsuits against swine operations.
The General Assembly has acted to protect agricultural operations from nuisance lawsuits before. North Carolina has had a “right to farm” law since 1979. Under G.S. 106-701, an agricultural operation that has been in existence for a year cannot be considered a nuisance based on changing conditions around it. “Right to farm” laws (adopted in nearly every state) attempt to protect farms from nuisance claims by people who later buy property near the farm — presumably with knowledge of the existing agricultural activity. In 1991, the N.C. legislature amended G.S. 106-701 to extend the same protection against nuisance lawsuits to forestry operations.
How H 467 Would Affect Compensation for Nuisance. “Nuisance” means interference with the use and enjoyment of another person’s property. For example, plaintiffs in the pending swine farm nuisance cases allege conditions created by farm operations (including odor, pests, and exposure to ammonia emissions) have caused health problems and restrict outdoor activities. H 467 limits the money damages that a plaintiff who successfully proves a case of nuisance can recover as compensation. Under the bill, compensation for a nuisance condition caused by an agricultural/forestry operation would be limited to either the fair market value of the property affected (for a permanent nuisance) or the fair rental value (for a temporary nuisance).
Historically, North Carolina case law has recognized other types of nuisance damages such as injury to a business. One case allowed compensation for water pollution that damaged a downstream fishing/ fish processing operation. Nuisance cases have also sometimes alleged health problems caused by the nuisance condition. H 467 does not allow a plaintiff to recover damages for a business loss or compensation for negative health effects. The only compensation for an agricultural/forestry nuisance allowed under the bill would be the fair market value or fair rental value of the plaintiff’s property. (I do not know whether compensation for health effects could be available under a legal theory other than nuisance.)
The bill may also bar award of punitive damages, which a court can award to punish and deter bad actors. In North Carolina, G.S. 1D-15 allows the court to award punitive damages if the defendant has been found liable for compensatory damages (such as lost property value due to nuisance conditions) and the plaintiff proves one of three aggravating factors: 1. fraud 2. malice or 3. willful or wanton conduct. Willful or wanton conduct means “the conscious and intentional disregard of and indifference to the rights and safety or others, which the defendant knows or should know is reasonably likely to result in injury, damage, or other harm.” See G.S. 1D-5 (7). Without further clarification, H 467 may be interpreted to prevent an award of punitive damages even if the defendant willfully ignored the likelihood of harm to nearby property or acted in violation of state law.
The Scope of H 467. The bill, as first introduced, would have applied to both pending nuisance lawsuits and future lawsuits. Two prominent Republican lawyers, former N.C. Supreme Court Justice Robert Orr and former Representative Paul Stam, raised questions about the constitutionality of limiting compensation available under pending lawsuits. In response to those concerns, the bill was amended to apply only to future nuisance lawsuits; the House then adopted the bill as amended.
H 467 also contains a provision that extends the limitation on nuisance damages to “any private nuisance claim brought against any party based on that party’s contractual or business relationship with an agricultural or forestry operation”. The language most likely intends to protect parent corporations sued as a result of nuisance conditions created by a subsidiary or contractual supplier. For example, the limit on damages would apply to Smithfield Foods as the parent company of Murphy Brown LLC even though Smithfield Foods itself would not be considered an “agricultural operation”.
Status of the bill. Having passed the House, H 467 still needs Senate approval. The bill has been scheduled for discussion in the Senate Agriculture, Environment and Natural Resources Committee today. If the bill receives the committee’s endorsement, it would go back through the Senate Rules Committee before reaching the Senate floor. (Note: Bills often pop out of the Rules Committee without warning.)
Bonus literary tip — A favorite children’s picture book by David McPhail describes a different kind of piggy nuisance.