The Court of Appeals (“COA”) held last week that a general contractor can not be held liable under North Carolina’s Sedimentation Pollution Control Act (the “SPCA” or the “Act”) for land-disturbing activities that resulted in an offsite deposit of silt, mud, debris and water on an adjacent landowner’s golf course. The 2-1 split decision limits the reach of the SPCA, codified at N.C. Gen. Stat. § 113A-50 et seq., to offsite sediment disposal into water; according to the COA, disposal onto land is not covered by the Act.
The lawsuit in Applewood Properties, LLC v. New South Properties, LLC arose from the rupturing of an erosion control basin that defendant general contractor had installed on defendant developer’s land. The basin had overflowed onto plaintiff’s golf course on a number of occasions over a period of several months, leaving behind an expensive mess.
The plaintiff asserted claims against the developer and the general contractor for violations of the SPCA, in addition to a host of common law claims such as negligence, nuisance, trespass and negligence per se. In light of that laundry list of common law claims, why might the statutory SPCA claims been valuable to plaintiff? Because unlike the common law claims, the SPCA claims carried with them the opportunity for plaintiff to recover its attorneys’ fees and expert witness costs in the litigation. N.C. Gen. Stat. § 113A-66(c).
Just before trial, the defendants were successful in dismissing the SPCA claims on a motion for summary judgment. The remaining claims were then tried, and a jury found both the developer and the general contractor negligent in their erosion control efforts. The jury’s damages award? $675,000.
Unsatisfied with this result — presumably because the jury’s award did not provide for recovery of attorneys’ fees and expert witness costs — plaintiff appealed the pre-trial dismissal of the SPCA claims. After apparently settling with the developer, the appeal went forward only against the general contractor.
On March 20, 2012, the COA upheld the trial court’s dismissal of the SPCA claims. The COA’s opinion relies heavily on the language of the SPCA’s preamble, which states in pertinent part as follows:
The sedimentation of streams, lakes and other waters of this State constitutes a major pollution problem. Sedimentation occurs from the erosion of depositing of soil and other materials into the waters, principally from construction sites and road maintenance. . . . It is the purpose of this Article to provide for the creation, administration, and enforcement of a program and for the adoption of standards which will permit development of this State to continue with the least detrimental effects from pollution by sedimentation. N.C. Gen. Stat. § 113A-51 (emphasis supplied).
A prior decision of the COA had interpreted the preamble to mean that “the state legislative intent behind the enactment of the SPCA . . . is to protect against the sedimentation of our waterways.” McHugh v. N.C. Dept. of E.H.N.R., 126 N.C. App. 469, 476, 485 S.E.2d 861, 866 (1997) (emphasis supplied). Based on the language of the preamble and the court’s interpretation of same in McHugh, the COA in Applewood held last week that “because the preamble to the SPCA provides that sedimentation results from the erosion or deposition of materials into water, it is clear that even a ‘land-disturbing’ activity requires an element of deposition into a body of water.” Since plaintiff in Applewood was only complaining about deposits onto land, the SPCA did not apply.
Environmentalists and other critics of the decision may argue that such an interpretation guts the effectiveness of the SPCA. That argument could still hold sway, since the COA’s decision includes a dissent that entitles plaintiff to further review by the North Carolina Supreme Court. It is presently unclear whether plaintiff will exercise that right.
For the moment, however, the general contractor in Applewood has been able to avoid paying the golf course’s attorneys’ fees and expert witness costs to which plaintiff may have been entitled under the SPCA. Still, a damages award of $675,000 isn’t exactly chump change. So developers and contractors would be well-served to note that common law remedies continue to exist even where a remedy under the SPCA may not. Stated differently, the Applewood decision is by no means a license to pollute. Reasonable care in the installation and maintenance of erosion control devices is still very much the order of the day.