Daily Development for
Thursday, February 25, 1999

 by: Patrick A. Randolph, Jr.
 Professor of Law
 UMKC School of Law
 Of Counsel: Blackwell Sanders Peper Martin
 Kansas City, Missouri

 HAZARDOUS SUBSTANCES; LIMITATION OF ACTIONS: Landowners reasonably rely on governmental investigation of groundwater contamination, and statute of limitations in landowners' action against neighbor for groundwater contamination does not run until such governmental investigation has uncovered an objective basis for belief that neighbor caused contamination.

 Jacobs v. NorLake, Inc., 579 N.W.2d 254 (Wis. Ct.  App. 1998).

  In 1984, NorLake discovered that its own ground water supply was contaminated and promptly notified the Wisconsin Department of Natural Resources and NorLake's neighbors, including plaintiffs, but denied responsibility for the contamination.  NorLake continued to deny responsibility throughout an eight year investigation conducted by the Wisconsin Department of Natural Resources.  During that eight year investigation period, the landowners' kept themselves informed of the progress of the DNR investigation but performed no independent investigation.  Although the DNR immediately identified NorLake as a suspected source of the contamination, the DNR did not positively identify NorLake as the source of the contamination until 1992. The landowners' brought suit three years later, in 1995.

  NorLake argued that the landowners' claim was barred by a six year statute of limitations that began to run in 1984, when NorLake reported the contamination and the DNR identified NorLake as a possible source. NorLake also argued that the landowners could not rely on the "discovery rule" to toll the statute of limitations because the landowners, who relied on the DNR investigation instead of undertaking their own investigation, did not exercise reasonable diligence in discovering the cause of their injury.

  The Court found that the landowners could rely on the discovery rule because they were required to exercise only the diligence a reasonable person would exercise in similar circumstances and it was reasonable to rely on the DNR investigation.  The Court also held that under the discovery rule, the cause of action accrued when the landowners had an objective basis for believing NorLake was responsible for the injury, not from the date plaintiffs first suspected NorLake.  The court remanded for a factual determination as to what that date was.

 Comment 1: The discovery rule already is a weasly rule that undercuts the certainty and the elimination of stale claims that the Statute of Limitations is designed to provide.  Although the policies of the discovery rule may be appropriate, it provides no substitute for the clean lines of the ordinary concept of limitations.  This case is a good example of that reality.

 Note that NorLake behaved responsibly and notified its neighbors many years ago, but the neighbors were permitted to sit back during the long period of government evaluation and do nothing, while memories faded and evidence deteriorated, before filing their claim.

 Comment 2: On the other hand, the expertise and high cost required to mount  an environmental lawsuit are so daunting that there may be some grounds for concluding that potential plaintiffs should be permitted to work until the government, running on a parallel track, has developed the  record.

 Items in the Daily Development section generally are extracted from the Quarterly Report on Developments in Real Estate Law, published by the ABA Section on Real Property, Probate & Trust Law.  Subscriptions to the Quarterly Report are available to Section members only.  The cost is nominal.  For the last six years,  these Reports have been collated, updated, indexed  and bound into an Annual Survey of Developments in Real Estate Law, volumes 1 - 6, published by the ABA Press.  The Annual Survey volumes are available for sale to the public.  For the Report or the Survey, contact Maria Tabor  at the ABA.  (312) 988 5590 or mtabor@staff.abanet.org

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