Walker Drug Co., Inc. v. La Sal Oil Co
In Walker Drug Co., Inc. v. La Sal Oil Co., 972 P.2d 1238 (Utah 1998), the Supreme Court of Utah, addressing an issue of first impression, held that a property owner was allowed to recover for lost market value due to the stigma created by temporary contamination of its property from a neighboring gas station. The court recognized that permanent damage to land does not necessarily entail a finding of permanent physical damage. See id. at 1246.
Rather, Stigma damages are a facet of permanent damages, and recovery for stigma damages is compensation for a property's diminished market value in the absence of "permanent 'physical'" harm. . . . A majority of courts from other jurisdictions . . . allows recovery when a defendant's trespass or nuisance has caused some temporary physical injury to the property but, despite the temporary injury's remediation, the property's market value remains depressed. . . . Thus, stigma damages compensate for loss to the property's market value resulting from the long-term negative perception of the property in excess of any recovery obtained for the temporary injury itself. Id.
The court reasoned, "Were this residual loss due to stigma not compensated, the plaintiff's property would be permanently deprived of significant value without compensation." Id.
The court pronounced that stigma damages are therefore recoverable in Utah when a plaintiff demonstrates (1) the defendant caused some temporary physical injury to plaintiff's land and (2) repair of this temporary injury will not return the value of the property to its prior level because of a lingering negative public perception. Id. at 1246-47.