McCoy v. Gustafson (180 Cal. App. 4th 56, 2009)

Opinion

RUSHING, P. J.

I. Introduction

In 1986, Margaret McCoy wrote a letter to the owners of the Grove Laundry in Pacific Grove, complaining that “black oil is seeping up between the laundry” and the house owned by Margaret and Edward McCoy on property downhill from the laundry (the downhill property). She asserted that it was the laundry’s “spill of black oil” and that they should clean it up.

The Blackwells, then owners of the laundry, made some efforts to clean up the oil contamination on the laundry property. After acquiring the laundry property in 1988, in 1993 M. Douglas Gustafson demolished one of the buildings and had almost 560 tons of soil excavated from the laundry property, as monitored and approved by the Monterey County Health Department (the Health Department).

Because the downhill property has remained contaminated, in 2002 the McCoys filed this civil action against the current and former owners of the laundry property. As the jury was instructed in this case, to release fuel oil into a neighbor’s soil without consent is a trespass, and to interfere with the free use and enjoyment of a neighbor’s property by contaminating it is a nuisance.

California law classifies nuisances and trespasses as either continuing or permanent. “An action for trespass upon or injury to real property” (Code Civ. Proc., § 338, subd. (b)) must be filed within three years of the discovery that the property has been contaminated by a permanent nuisance (Mangini v. Aerojet-General Corp. (1996) 12 Cal.4th 1087, 1096, 1103 [51 Cal.Rptr.2d 272, 912 P.2d 1220] (Mangini II)), while a new action can be filed every three years for the damages caused by a continuing nuisance or trespass. A nuisance is regarded as continuing if “the nuisance can be remedied at a reasonable cost by reasonable means.” (Id. at p. 1103.)

Based primarily on the 1986 letter complaining about oil seeping from the laundry, the trial court summarily adjudicated that plaintiff’s claims for negligence, permanent nuisance, and permanent trespass were time-barred. The trial court later denied plaintiff’s motion to amend the complaint a month before trial.

Plaintiff proceeded to trial on theories of continuing nuisance and trespass. The jury concluded by way of a special verdict form that two defendants, M. Douglas Gustafson and his corporation, the Tamarind Group, Inc., had intentionally, recklessly, or negligently caused oil or other petroleum products to be released onto the downhill property, thereby creating a condition that caused harm and interfered with plaintiff’s free use and enjoyment of the downhill property.

The jury was instructed, among other things, that, to establish a nuisance, plaintiff was required to prove “that the condition can be repaired, or abated, by reasonable means and at a reasonable cost.” To establish a trespass, plaintiff was required to prove “that the unauthorized entry can be removed, repaired, or abated, by reasonable means and at a reasonable cost.” Given the choices “[y]es,” “[n]o,” or “[ujnknown” in question No. 5 on the special verdict form (pertaining to nuisance and trespass), the jury determined that it was “unknown” whether the condition of plaintiff’s property could “have been repaired or abated by reasonable means and at a reasonable cost.” As directed by the verdict form, in light of this special verdict, the jury bypassed the remaining questions about damages and signed the verdict form.

We will conclude for the reasons stated below that this special verdict established the statute of limitations defense, so the trial court should have entered judgment in favor of the Gustafson defendants based on this special verdict, as they contended in a motion for judgment notwithstanding the verdict. Based on the lack of evidence at trial that the contamination of the downhill property is reasonably abatable, the jury could not have found otherwise. We will further conclude that this failure of proof did not result from any erroneous ruling by the trial court in connection with granting summary adjudication, denying plaintiff’s motion to amend the complaint, or limiting the expert testimony presented by plaintiff.

This action did not end with this special verdict. The trial court directed the jury to deliberate further, after which it determined by special verdict that the Gustafson defendants acted with malice, fraud, or oppression in creating a nuisance, but not by releasing oil. After a bifurcated trial, by a separate special verdict, the jury awarded punitive damages of $250,000 against M. Douglas Gustafson and $250,000 against the Tamarind Group, Inc.

Plaintiff and the Gustafson defendants both challenged this outcome, with defendants moving for a judgment notwithstanding the verdict and an order vacating the punitive damages award, and plaintiff making a motion for a new trial. The trial court deemed defendants’ motion also to be seeking a new trial. The court ruled orally, “I think that the verdict form was unfortunately hopelessly mired in confusion and ambiguity, such that I think a motion for new trial has to be granted, both as to the issues of compensatory damages, punitive damages, the corporate and individual standing of Mr. Gustafson.” Both sides have appealed from this ruling, and plaintiff has appealed from the original judgment and related prior rulings.

We will conclude, for reasons stated below, that the trial court erred in granting the motion for new trial and denying the motion for judgment notwithstanding the verdict. Accordingly, we will reverse the order granting a new trial and direct entry of a judgment in defendants’ favor.

II. Pretrial Pleadings and Rulings

A. The Pleadings

The complaint, filed April 29, 2002, alleged the following. Plaintiffs Edward and Margaret McCoy owned residential property downhill from the Grove Laundry in Pacific Grove. While defendants Galen and Gary Blackwell owned and operated the laundry, bunker oil was discharged into the ground, and the oil has migrated through the groundwater and soil on and under the downhill property. Defendant M. Douglas Gustafson, individually and as a trustee of the M. Douglas Gustafson Tmst, and through the corporate defendants Spindletop, Inc., and the Tamarind Group, purchased the uphill property from the Blackwells, sold it, repossessed it, and attempted to clean up the contaminated soil on the uphill property. Gustafson sold part of the property to defendants Thomas and Claude Finklang, doing business through the corporate defendants CTE Properties, Inc., the Grove Homescapes, and the Grove Innerscapes (the Finklang defendants). The Finklang defendants demolished the laundry and replaced it with a retail and residential building. In July 1999, the McCoys discovered groundwater filled with petroleum during excavation of a trench about 18 inches deep on their property. The McCoys alleged causes of action for negligence, nuisance per se, private and public nuisance, and trespass as a result of the contamination of their soil. They requested damages representing the diminution in their property value, interference with their use of their property, their costs of improving their property and testing for toxic wastes, and punitive damages.

M. Douglas Gustafson, individually and as a former trustee of the M. Douglas Gustafson Trust, and the Tamarind Group, formerly doing business as M. Douglas Gustafson & Co., Inc., and Spindletop, Inc., filed an answer alleging a number of affirmative defenses, including that plaintiff’s action was barred by the three-year statute of limitations for damages to real property.

B. The Motions for Summary Adjudication

On October 27, 2005, the Gustafson defendants filed a motion for summary adjudication asserting that the statute of limitations barred plaintiff’s claims of permanent nuisance, negligence, and trespass. The motion was heard on January 27, 2006, and taken under submission. The motion was based primarily on an exchange of letters between Margaret McCoy, Marc Blackwell, and the Health Department from April 1986 through September 1987.

On April 22, 1986, Margaret McCoy wrote to Marc Blackwell that Mrs. Walker had complained of oil seeping up between the Grove Laundry and the downhill property at 164 12th Street in Pacific Grove that Walker rented from Margaret and Edward McCoy. Marc Blackwell was the son of Galen Blackwell, one of the owners of the Grove Laundry. By letter dated April 29, 1986, Marc Blackwell accepted full responsibility for the situation and offered to clean up the downhill property. He noted that he had been in contact with the Health Department. On September 3, 1987, the Health Department wrote, asking Blackwell to establish a cleanup schedule in coordination with his consultant, Russell Juncal of WaterWork. One of the elements to be scheduled was installation of monitoring wells.

WaterWork performed some work on the laundry property by January 1988, when the Blackwells sold the property to M. Douglas Gustafson.

Plaintiff filed opposition to the motion. Plaintiff acknowledged that the three-year limitations period of section 338, subdivision (b) applied, but argued that the downhill property suffered no “appreciable and actual harm” until “after confirmation of the soil sample showed high levels of petroleum contamination were present in the soil and groundwater underneath the property.” The written opposition made no claim that the state statutes of limitations were preempted by the federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA; 42 U.S.C. § 9601 et seq.).

On March 10, 2006, Galen Blackwell filed a motion for summary judgment or summary adjudication based on a release of liability executed by Gustafson and the statute of limitations.

On March 27, 2006, the trial court ruled in writing that the McCoys were on notice of possible oil contamination of their property in 1986, so claims of negligence, negligence per se, trespass, and permanent nuisance were barred by the applicable three-year statute of limitations long before the lawsuit was filed in 2002. While they could proceed on claims for continuing nuisance and trespass, their damages were limited to those incurred within three years of their lawsuit and did not include diminution in market value or damages for future harm.

On May 2, 2006, plaintiff sought clarification of the summary adjudication ruling. This written motion made no reference to CERCLA.

On May 12, 2006, plaintiff filed opposition to Blackwell’s motion for summary adjudication. This opposition did not mention CERCLA.

Plaintiff’s motion for clarification was heard on May 19, 2006, and taken under submission.

On June 9, 2006, Blackwell’s motion for summary adjudication was heard and taken under submission.

On June 12, 2006, the court issued an order on the motion for clarification, essentially indicating that its prior ruling needed no clarification. On the same date, it granted Blackwell’s motion for summary adjudication, reaching the same conclusions about the statute of limitations, and recognizing that Gustafson had settled prior litigation with the Blackwells by releasing them from further liability for any contamination.

On June 28, 2006, at a hearing on motions in limine, the trial court clarified that its summary adjudication ruling was intended to apply to plaintiff’s purported claim for nuisance per se.

C. The Motion to Amend the Complaint

On May 26, 2006, with a pending trial date of June 27, 2006, plaintiff filed a motion seeking leave to file a first amended complaint. This motion was heard on June 2, 2006, and taken under submission. On June 12, 2006, the court denied plaintiff’s motion to amend the complaint, giving the following written explanation. “This case arises from a release of ‘bunker oil’ at the Grove Laundry site in 1986. Evidence in the prior motion showed Plaintiffs were on notice of oil contamination in their property in 1986, but did not file this lawsuit until 2002. Plaintiffs now seek to allege new causes of action stemming from remediation efforts made by Defendants on their own property in 1987 and 1993.

“Plaintiffs seek to allege that Defendants failed to obtain permits and install monitoring wells as directed by the County and the State. Additionally, Plaintiffs claim Defendants failed to record or provide technical information as required by the State. Lastly, in 1995, Defendants allegedly discovered oil in postholes while erecting a retaining wall, and ‘turned a blind eye’ to it.

“The amendment does not appear to be appropriate. The ‘bunker oil’ was released onto Defendants’ property in 1986. Evidence before the court on the summary judgment motion indicated Plaintiff Margaret McCoy was aware of the black oil ‘seeping’ onto her property in 1986-87 and wanted Defendant Blackwell or the County to replace the soil and clean up the oil at that time. No remediation efforts on Plaintiffs’ property ever took place.

“The fact that Defendants remediated their own property unsuccessfully more than once, and the fact that the County has undertaken remediation efforts with Defendants, do not create new causes of action for Plaintiffs.”

III. The Trial

A. Motions in Limine

Plaintiff’s counsel, Kathleen Clack, made a motion in limine to exclude evidence that had not been produced in discovery. At a hearing on June 28, 2006, the trial court essentially granted the motion.

Representing the Finklang defendants, Mark Hudak made a similar motion in limine to exclude any evidence of the cost of remediation or repairs, because none of plaintiff’s three designated experts was designated to testify on that topic. He pointed out that, at his deposition, Michael Bums stated that he did not know how much soil would need to be excavated from the downhill property or what the cost of excavation would be. Rifaat Sammy Salem also had made no estimate of the amount of soil that needed to be excavated from the downhill property. Salem’s partner, Todd Polvado, had estimated only the cost of the engineering work for replacing the retaining wall, not the total cost of the wall.

Clack admitted that none of those experts was a cost estimator. Michael Bums “wasn’t hired to give a cost estimate.” Polvado had made no attempt to “cost out any of the work.” At his deposition on June 8, 2006, Polvado stated he “ ‘can’t speak to the amount of soil that might need to be excavated at this point.’ ” However, according to Clack, Polvado had given a contractor, Mr. Mosebach at DMC Construction, a scope of the estimated work for soil excavation, and the contractor had come up with a number. Clack asserted that Polvado could recite this estimate during his testimony and that it was common knowledge what it costs to remove a cubic yard of dirt. The court disagreed, saying it was a matter of expert testimony. The trial court stated, “You’re in trouble, Ms. Clack. It appears that you don’t have the evidence.”

Hudak pointed out that Polvado had not seen the DMC estimate at the time of his deposition. Under questioning by the judge, Clack admitted that Polvado never said whether the estimate was reasonable or not. Quoting from Polvado’s deposition, DMC’s various estimates pertaining to the removal of different amounts of soil, whether 120 cubic yards or 800 cubic yards, were not based on information he provided. Mosebach was not designated as any kind of witness.

Clack explained to the court that she did not require more of her experts because the Regional Water Quality Control Board had been pressing Gustafson to obtain estimates for remediation work.

The trial court granted the Finklang defendants’ motion in part.

Clack suggested that defendants could conduct another deposition of Polvado, because he “was under terrific strain” in his deposition, so he became “somewhat flustered.” The court said it was unaware “of any Evidence Code or Code of Civil Procedure exception for being flustered at a deposition.” She had earlier suggested that he had not had time to review and correct his deposition, so he should be given time to do so.

Plaintiff did not oppose a motion in limine to exclude her experts from presenting new opinions.

B. Trial Evidence

We will set out separately the evidence at trial of soil contamination, the property owners involved, past cleanup efforts, and whether there was any evidence at trial that the contamination could be abated by reasonable means at a reasonable cost.

1. The Discovery of Oil Migrating Downhill Underground

A laundry known as the Grove Laundry was constructed in Pacific Grove at 472 Lighthouse Avenue in 1914. The Blackwell family acquired the laundry in 1956 and operated it until they sold the property in January 1988.

In 1947, Edward and Margaret McCoy acquired the downhill property at 164 12th Street. The house on it was originally constructed in 1895. After living on the property for a little over two years, they relocated to southern California and rented out the residence. The Walkers were longtime tenants.

Michael Bums is an engineering geologist retained as plaintiff’s expert in environmental geology. According to documents he reviewed, until 1980 the laundry used boilers fueled by fuel oils like bunker oil to heat the water used for cleaning. The basement of the laundry was unpaved soil. Over time, there were three boilers and three sumps that were used for collecting oil. In 1980, there was a reported accident where up to 200 gallons of fuel oil spilled onto the floor of the basement. Soapy water, which leaked into the basement, helped oil seep into the soil.

Bums explained that petroleum hydrocarbons in the soil will float in groundwater when it rises to the level of the contamination. Groundwater containing contamination will flow downhill from the source along underground pathways to receptor soil. This is what happened with the fuel oils released in the basement area of the laundry. They migrated into the groundwater, through the foundation wall, and onto the downhill property. He does not know when oil first began migrating onto the downhill property or how much oil has reached the downhill property.

In a letter dated April 22, 1986, Margaret McCoy complained to Marc Blackwell about oil from the laundry seeping up on her property.

On July 25, 1986, there was a complaint to the Health Department about bunker oil on the walk between the laundry and the downhill property. At the time, Jon Jennings was the supervisor of the hazardous materials program for the Health Department’s Division of Environmental Health. A field inspector for the Health Department confirmed that there was oil on the downhill property and reported that sump soil on the laundry property had been contaminated for about 20 years. The Blackwells promised to remove the contaminated soil.

The State Regional Water Quality Control Board (the Water Board) was notified, but was not interested in 1988 because the groundwater was not drinkable. The Water Board’s jurisdiction is groundwater, while the Health Department’s jurisdiction is soil.

In January 1988, Gustafson bought the laundry property, on which there were two buildings, from the Blackwells. He sold it to Tom DiMaggio 11 months later. On February 13, 1991, the Health Department contacted DiMaggio about studying the contamination on his property. DiMaggio discovered there was contaminated soil from a sump. DiMaggio sued Gustafson, and Gustafson sued the Blackwells for not disclosing the soil contamination. One outcome of the litigation was that Gustafson took back the property from DiMaggio.

Another outcome was that there were cleanup efforts involving excavation of the laundry property in 1993. On November 8, 1993, the Health Department wrote a clearance letter approving Gustafson’s cleanup efforts. On November 30, 1993, Gustafson and the Blackwells reached a settlement of their litigation which acknowledged the clearance letter and that the Blackwells had removed all the contaminated soil at their expense, with Gustafson to reimburse them $40,000 for costs if he sold both of the parcels that were on the market.

In February 1994, Gustafson sold part of the laundry property to GTE Properties, Inc., a corporation of Claude and Thomas Edward Finklang. Gustafson has retained ownership of the property at 166 12th Street, the property on which three sumps were found during the 1993 excavation.

Before acquiring the property, Thomas Finklang was aware of the contamination issues on the adjoining property that Gustafson retained and the clearance letter. GTE did extensive renovation on the remaining building on his property. It dug a basement and put a foundation under the building. It removed virtually everything under the original building down to the bedrock. Despite the daily presence of government inspectors, there were no reports of soil contamination. Some of the soil was used for berms on the City of Pacific Grove’s golf course. Other soil went to the Monterey Peninsula Airport.

Rhett Smith, a friend of Thomas “Bo” Finklang, was involved in the construction of the basement. According to Smith, some of the debris from excavating under the building was put on Gustafson’s lot and buried under soil that was excavated from under the building.

Roger Stang was a contractor involved in the renovation. Before he got involved, all the soil had been removed to a depth of 10 feet. He stored his building materials on the vacant lot owned by Gustafson. Stang was asked to dig fence holes on Gustafson’s property adjoining the downhill property. According to Stang, when his men dug the holes, they were nauseated by the holes filling with oil, so they stopped digging the holes.

According to Bo, Stang constructed what was intended to be a temporary retaining wall on Gustafson’s vacant lot to give the resident of the downhill property some privacy. Smith took a number of photographs of the renovation work. He also made a videotape that showed oil coming up in fencepost holes that were 30 inches deep. Posts were put in the holes and the retaining wall and a fence were quickly completed.

On the Finklang property, a three-story building with a basement replaced the existing one-story building. When the renovation was complete, Thomas Finklang set up an importing business on the premises.

At trial, Thomas Finklang denied that he had ever seen Smith’s videotape. When asked by his counsel if he was surprised to learn that there was oil appearing in postholes on plaintiff’s property, he answered: “It wasn’t a surprise to anybody. Mrs. Walker knew about it. The McCoys knew about it. We knew about it. The City knew about it. The City of Pacific Grove talked about it. Everybody knew it was there.”

Cecelia McCoy, the daughter of the original property owners, moved in to the downhill property in December 1998 and began improving it. She hired a contractor to put in a curtain drain between the retaining wall and the house. The contractor dug trenches about 18 inches deep in the yard in July 1999. He called her to say that he was finding oil in the trenches, so he could not continue the work. He covered the trenches with plywood.

She had the soil tested. When she got the results showing contamination above regulatory action levels, she contacted the Health Department in August 1999. They said they would look into it. She heard from the district attorney’s office. She later learned the Water Board was going to take over the case. It was her understanding that they were going to direct the cleanup. Nothing had been done to remove the oil from the downhill property before the lawsuit was filed in April 2002. Due to the contamination, she has been unable to improve the property, enjoy it, rent it, or sell it without losing money.

2. Past Efforts at Abatement and Remediation

In 1986, after Margaret McCoy’s written complaint about oil on the downhill property, Jon Jennings recollected that the Blackwells were pumping oil out from the laundry property before the Health Department got involved. The Health Department directed them to clean up the contaminated soil and to obtain expert help. The Blackwells hired Russell Juncal’s company, WaterWork, to identify the extent of the contamination. On June 15, 1987, WaterWork proposed to remove all the contaminated soil it could without disturbing the foundation of the structure.

According to Jennings, there were several possible methods of dealing with soil contamination. Monitoring wells would be installed to keep track of the contamination. One method was to construct an underground impermeable slurry wall to contain the contamination, as well as a collection system allowing the contamination to be pumped out. Removing the source was another alternative. In the case of the laundry property, the attempt was to remove all the visible contamination.

The Health Department did not direct the Blackwells to remediate the downhill property. There were at least two reasons why. The first step before performing a cleanup is to locate the source and extent of the contamination. They were focused on the first step. Also, it was impractical to remediate the downhill property because there were a house and garage on it. The most likely method for cleaning up the downhill property would involve removing the house from its foundation and excavating the soil from two to 20 feet down. They probably would have directed remediation of the downhill property if there appeared to be a significant health risk.

It was Jennings’s impression that the contamination was not removed before the property changed ownership. On May 21, 1990, WaterWork produced a draft report addressed to Gustafson reflecting its conclusions about the extent of the contamination based on its investigation, which began in 1987, and estimating the costs of the cleanup that might be required by the Health Department and the Water Board. Michael Bums relied on this report in forming his opinion about the soil contamination.

During the pendency of the litigation between Gustafson and the Blackwells, on August 16, 1993, Spindletop, Inc., obtained a demolition permit for half of the laundry building. Gustafson had the closed building demolished to make it easier to remove the bunker oil and to facilitate sale of the property.

In Burns’s opinion, the existence of buildings on the laundry property inhibited the investigation and removal of soil contamination. Removing a building facilitated the removal of the contamination. The downside of removing a building is that the building no longer deflected rain from the property, so it would enter the soil and the groundwater. That would mobilize the remaining contamination. The effect of a retaining wall would be to pool water on the uphill property, contributing to mobilizing the remaining contamination.

On September 23, 1993, Spindletop, Inc., hired the Don Chapin Company to excavate the contaminated soil. The original estimate was to remove 44 cubic yards, 75 tons, of soil at a cost of $15,525. In cleaning up contaminated soil, one often does not know the extent of the contamination until excavating and sampling the soil. The property owner hired the contractor, but the contractor obeyed the directions of the Health Department as far as what to do to remove the contamination. Cory Welch was a hazardous materials specialist with the Health Department who visited the jobsite two or three times a day.

The work, involving excavating soil, transporting soil and debris away, having the remaining soil sampled by a laboratory, pumping oil from sumps, and more excavation, began on October 18, 1993, and ended on October 27, 1993. Three sumps, all redwood containers, were uncovered, with the third being located and excavated on the final day of work. One sump was near the property line with the downhill property. Eventually the excavators removed about 560 tons, 25 truckloads, excavating to about 15 feet deep. They stopped excavation when Welch allowed them to. According to Welch, they “had, basically, dug out everything on the Gustafson property that was possible,” down to the granite bedrock interface. The total charge for the work was $104,185.58.

Gustafson was upset about the excavation’s being more extensive and expensive than the original estimate. Gustafson recalled that the Chapin Company backfilled the excavation, but according to the company’s records, he directed the company not to backfill the property and received a credit of $13,993.75. With a discount of $2,191.83 for prompt payment, the Blackwells paid $80,191.83 and Gustafson paid $7,808.17.

On November 8, 1993, Welch sent the following letter to Gustafson. “This office has received soil samples taken from 472 Lighthouse, Pacific Grove, the site of the former Grove Laundry. Samples were taken 10' below ground surface at the bedrock fill interface of two sumps that were uncovered during soil excavation. These samples indicate that localized contamination still exists at the immediate location of the former sumps.

“All other possible soil contamination has been removed from the site. It has been previously noted that offsite migration has occurred primarily to the Walker residence] (south) and to 12th Street (east). At this time it is impractical to further excavate this known contamination.

“It is the view of this department that no significant health risk exists at this location at this time. Please be advised that this letter does not relieve you of any responsibility mandated by the California Health and Safety Code if additional or previously unidentified contamination is discovered at this location. If any land use patterns change regarding the Walker residence, or of 12th Street, additional remediation may be required.”

This letter was not addressed to the McCoys. Gustafson recalled that he had asked Welch to provide them with a copy. Welch did not recall such a request nor did he recall notifying them of the letter.

Almost six years later, on August 16, 1999, Welch sent another letter to Gustafson, notifying him that high levels of petroleum hydrocarbons had been discovered in the groundwater and soil of the downhill property as a result of construction activities, and that he was expected to mitigate it. His response was that he had done enough. When the Health Department gets no response, it turns the matter over to the district attorney.

Beginning with a letter on December 22, 1999, and continuing after the commencement of this lawsuit in April 2002, the Water Board has sent Gustafson numerous letters drafted by Dr. Wei Liu identifying Gustafson as responsible for investigating and cleaning up contamination on his property, as well as the downhill property. He was directed to send the board regular reports on his progress. Gustafson hired Doug Cook of ATI to do some soil tests.

According to Gustafson, because he had difficulties meeting some of the Water Board’s deadlines, he was prosecuted and convicted and placed on probation for three years.

3. Evidence of the Potential Future Costs of Abatement and Remediation

Of plaintiff’s three experts at trial, two were partners in the Salem Engineering Group. Rifaat Sammy Salem is a licensed geotechnical engineer and Wayne Todd Polvado is a licensed civil engineer. Polvado acknowledged that it was not within his expertise to say how much soil needed to be excavated in order to complete the remediation of the downhill property. That was up to the environmental consultant, Michael Bums. Polvado had simply noted that the existing retaining wall between the properties needed to be replaced and he had a plan for doing that. He would want to do some soil borings first. He estimated that it would cost $20,500 for his firm’s engineering services division to replace the retaining wall. Polvado had no idea how deep the contamination was near the wall. Salem likewise had no opinion on whether the soil needed to be excavated on the downhill property or how much would need to be excavated. He and his partner were not asked to design a remediation plan. Neither Polvado nor Salem believed that the leaning of the retaining wall was related to any contamination of the soil.

According to Polvado, if excavation had to be done under the house on the downhill property, the house could be supported by a system of beams and piers while the work was done, and, afterwards, a new footing system would have to be built.

Bums could not say if there was more or less contamination on the downhill property at the time of the trial in 2006 than in November 1993. He suspected it might be less due to natural bioremediation, which involves microbes eating the contaminants in the soil. He could not say how much oil had migrated onto the downhill property since 1993. It was not contamination that caused the retaining wall to lean.

It was the opinion of Bums that the contamination on the downhill property could be remediated by excavating the soil. That was a cheaper alternative than bioremediation. In order to abate the problem, first the source of the contamination on the uphill property would have to be located through sampling and testing of the soil. There were still some unknown sources of contamination on the laundry property, maybe in pockets in the bedrock. The existing retaining wall would have to be replaced and the soil removed. A French or curtain drain could be installed on the uphill property to divert groundwater and contamination. There would have to be sampling, testing, and excavation on the downhill property until the contamination was removed.

Bums did not have enough information to say where the contamination on the uphill property was and whether it was under the existing building. It would cost $225 to $250 to excavate one cubic yard. He did not know how much soil needed to be removed from the downhill property to remediate it. He had no opinion on what it would cost to remediate the property by excavation. He had not come up with a remediation plan to fix the downhill property, because it was his understanding that the Water Board had directed other people to come up with a plan. He had not done soil samplings because other people had been doing them at the direction of the Water Board.

Bums had estimated his future involvement as reviewing the remedial plans submitted to the Water Board, inspecting the area, and reviewing the remedial work, at a cost of $8,740.

C. Rulings During Trial

After plaintiff’s expert Polvado was precluded from discussing the DMC Construction estimates for excavation, Attorney Clack attempted to have plaintiff herself testify to the contents of this estimate. After a hearing in the jury’s absence, the court sustained objections on the grounds that the evidence was hearsay and it was the subject of expert testimony.

The first witness testified on July 6, 2006. Plaintiff called Dr. Wei Liu to testify on the fifth day of testimony. Liu works for the Water Board. He drafted a series of letters to Gustafson, the first dated December 22, 1999, identifying Gustafson as a party responsible for contamination reported on the downhill property and directing him to investigate and clean up the contamination. Finklang’s counsel objected to the admission of the letters into evidence.

At a hearing in the jury’s absence, Hudak objected that the letters were hearsay, prejudicial in identifying responsible parties, and irrelevant. Clack explained, “I really want him to testify to the facts that are contained in the letters. That was my primary purpose in bringing it here—him here.” “[T]here’s a great deal of information, in these letters, that Dr. Liu has prepared, that can actually define much of what has transpired on this property.”

When the court asked what new facts the letters contained, Clack responded that they talked about enforcing the Water Code and the scope of the work. When the court asked how it was relevant to proving nuisance or trespass, Clack responded that it was “associated with whether or not the nuisance continues. This tells you whether or not you can abate the nuisance.”

The court said that it would be appropriate to have an expert testify on those topics. Clack admitted that Liu was not designated as an expert. She reiterated that she wanted the contents of the letters in. The court stated: “That’s the problem. There’s a problem because, if once again you’re asking for testimony of an expert nature without designating [an] expert, without calling the people that did the work, I assume this talks about work that needs to be done, who would be testifying as experts, if they were called. Somebody who did borings, somebody who did measurements, somebody who did soil samples, all those people would be experts; they would testify as experts. And, if they’re not going to testify, and he’s going to give an opinion about what they did, as Mr. Bums did, of other people’s opinions, that they be listed as an expert for that purpose.”

Clack asserted that Liu had personal knowledge of his own work. The court replied, “Personal knowledge, if you have an expert—if what he testifies to is beyond a layperson’s knowledge, the fact that he’s done it, does not permit him to testify to it unless he’s disclosed and designated under the Code of Civil Procedure as a witness that will be giving expert testimony. So, that the other side has the opportunity in advance to take his deposition to compare what he knows, how he knows it, to what other people know, where he got that information from and to be prepared to present that at court. If that hasn’t occurred, if he’s not going to be designated as an expert, then you’re just asking him—then he’s a lay witness. He’s not relevant as a lay witness. He’s only relevant as an expert witness. He’s not giving any lay opinion.”

Returning to the topic, the court stated, “Because he’s not been designated as an expert, the troth contained in the letters is not admissible.” “And, had Mr. Liu been designated as an expert, it would probably all come in for the truth.” It would be asking too much of the jury to ignore the truth of the contents of the letters and rely on them just to establish that defendants were notified about the contamination of the downhill property.

Clack asked if Liu could testify as to what he had personally done, which was determining what kind of information needed to be gathered about the site. The court asked, “What is it that he has done that—for which he would not be required to be testifying as an expert?” Clack responded that he analyzed data from soil samples and determined whether more samples were needed. The court observed: “That seems to be in the nature of somebody who’s not a layperson who has the special background, training, education, and experience to give opinions in those areas. [|] In that sense, he’s acting as an expert would, and in the absence of his having been disclosed as an expert would be a miscarriage of justice to let him testify, because he hasn’t been deposed or examined because he wasn’t disclosed as giving expert opinion.” In light of this indication, Clack ended her direct examination of Liu.

D. Jury Arguments

We review plaintiff’s arguments to the jury with special attention to the topics of the reasonable costs of abatement and remediation. Her opening argument included the following. “We’ve learned from our experts, that they’ve advised us that, in order to remediate her property, and abate the nuisance on her property, you can excavate the soil, [f] You can excavate the soil, and you can do the remediation, because the source is not on her property. We can also abate what is coming off the adjacent properties. We can do it through excavation and proper drainage, to protect her property from getting more of this. . . . There are things you can do with curtain drains and pumps and sumps.” “We’ve also got some costs for the work that we think needs to be done—that we know can be done.”

After arguing that all the defendants were responsible for oil continuing to migrate downhill, plaintiff stated: “So then, we ask ourselves, can this problem be remediated or abated? Okay. Number one, her soil can be cleaned up because she isn’t the source. Her soil can be excavated.” “Our experts have, they’ve told you excavation is the preferred method. They’ve, also, told you that putting in drainage is a preferred thing to do.”

“Now, we’ve heard about some of the costs that are involved in this.” For Salem Engineering to replace the existing retaining wall it would cost $20,500. Michael Bums would charge $8,740 for his future efforts. If plaintiff had to leave her house because it was lifted, it would cost her $2,900 per month to rent a comparable house. “If you figure it’s going to take three to six months to get that excavation done, get it tested, you figure it’s 2,900 for a while.”

“So then, we talk about what is a reasonable cost to remediate the soil or to abate the nuisance? Well, one thing we do know is that, in 1993, it costs Mr. Gustafson and the Blackwells $104,000. At least we know it’s not going to be cheaper than . . . that for 559 tons.” “The reasonable cost of the repair is well less than the value of this property,” which was stipulated to be $798,000.

“We know that the nuisance can be abated, from flowing on to the McCoy property. . . . They would like to know more about the source, so that it can be best identified. But, we do know that there are devices that can be used, the curtain drains, capturing it at the right places, doing the right retaining wall.”

Plaintiff’s closing argument included the following on these topics. Quoting witness Jon Jennings, “ ‘To clean up the contamination normally means to excavate down to a depth of anywhere from, you know, two or three feet down to, you know, 20 feet and remove all of the contamination on the property. You would disrupt the foundation of the existing house, and the most likely scenario would be once the house is removed, the contamination could be addressed.’ ” The argument reiterated, “It’s probably not going to be cheaper than the $104,000.” Later, plaintiff returned to that theme. “We know, and have a good idea, what it costs to dig up all that soil. We have a pretty good idea of—dig up the soil back in 1993.”

E. Jury Instructions and the Special Verdicts

Some of the jury instructions have already been summarized above in the introduction. The jury was also instructed that the theories of nuisance and trespass involved the elements that a defendant’s conduct was a substantial factor in causing harm to plaintiff or her property. Upon finding plaintiff’s claims proved, the jury was required to decide how much money would reasonably compensate plaintiff for her harm. Plaintiff claimed two types of damages, economic and noneconomic. The noneconomic damages included the loss of use of the property for three years, annoyance, discomfort, or inconvenience. Economic damages included the cost of expert consulting, but not diminution in property value or future harm. For continuing trespass, damages were the difference in rental value if the property were not contaminated, but not emotional distress.

The jury was also instructed: “A release of contamination means to free the contaminants from a container or containment. If petroleum contamination is already in soil or groundwater due to a past release, it cannot be released again, by later acts of a party who uncovers it.”

During deliberations, the jury pointed out a logical error in the verdict forms. The court agreed the form needed to be corrected as the jury suggested and it resumed deliberations. Later that day, on July 20, 2006, the jury found by way of special verdict forms that defendants M. Douglas Gustafson and his corporation, the Tamarind Group, Inc., had caused oil or other petroleum products to be released onto the downhill property, thereby creating a condition that caused harm and interfered with plaintiff’s free use and enjoyment of the downhill property.

As stated above in the introduction, the jury did not proceed to award compensatory damages for nuisance or trespass because the special verdict form told them not to unless they could affirmatively answer that the condition of plaintiff’s property could “have been repaired or abated by reasonable means and at a reasonable cost.” Of the choices, “yes,” “no,” and “unknown," the jury selected “unknown,” bypassed the remaining questions about damages, and signed the verdict form.

The jury did not initially answer question No. 8 (pertaining to nuisance and trespass) asking whether any defendant who had created a nuisance or committed a trespass had acted with malice, fraud, or oppression. In the jury’s absence, the court identified a problem in that the jury had not answered these questions. The Gustafson defendants asserted that the answer to question No. 5 “makes everything else moot,” and “[i]f the verdict is no general damages, then there may be no punitive damages without general damages.” The court stated: “That may be your argument post trial, but, at this point of the proceeding, I’m giving the jury the form back. I’m sending them in. [][] I’m letting you know. We’re not debating it.” The court instructed the jury to continue deliberations. They determined that the Gustafson defendants acted with malice, fraud, or oppression in creating a nuisance, but not by releasing oil. In returning that verdict, the jurors made notes on the verdict form that they discussed with the court. Three jurors stated that they found it confusing that they were required to answer question No. 8 when the form told them they were done if they answered question No. 5 “unknown.” One juror said they were no longer confused.

The Gustafson defendants, the only remaining defendants, objected to further proceedings, asserting that “this form is quite correct. I believe the answer ‘unknown’ to question five is completely dispositive of this case.” “I believe the Court made a mistake when it sent them back.”

The court proceeded to a bifurcated trial on the amount of punitive damages. On July 21, 2006, on a separate “verdict form as to punitive damages” (capitalization omitted), the jury awarded punitive damages of $250,000 against M. Douglas Gustafson and $250,000 against the Tamarind Group, Inc.

After the court instructed the jurors that they could now talk to anyone about the case if they wanted to, several jurors had questions for the court. One of them asked, “Besides punitive damages, what else is there?” The court explained the difference between punitive and compensatory damages. The same juror asked, “So we declared the punitive damages; whereas, do you impose the compensatory damages?” The court answered, “No. You also declared . . . unknown ... in the previous verdict.” Another juror said, “We said unknown?” The court stated: “That’s right. That is what you said. That verdict has been recorded.”

IV. Postjudgment Rulings

On August 4, 2006, the Gustafson defendants filed a motion for judgment notwithstanding the verdict and an order vacating the punitive damages award. Defendants’ motion asserted that the “court may not proceed under time-barred causes of action.” (Capitalization omitted.) “[Ojnce the statute of limitations is found to bar a cause of action, there is no method by which a court may proceed further.” “[A]ny damages the jury awarded in reliance on a time-barred cause of action may not stand.”

On August 30, 2006, plaintiff filed a motion seeking a new trial either limited to the issue of compensatory damages or on all issues. Plaintiff’s written motion asserted in part: “The Court should find that the jury’s verdict is ‘against law’ because the verdict was so inconsistent, ambiguous and uncertain that we are incapable of reconciling how the jury found liability and awarded punitive damages, while failing to find on a material issue, compensatory damages.” “Where an inconsistency is identified before the jury is discharged, the court has a duty to order its correction by either advising the jury or sending jurors back for further deliberations. In the liability phase of the trial, the Court identified the inconsistency in the Verdict Form Questions and before discharging the jury ordered its correction by sending the jurors back for further deliberations on Question 8. The judge was completely within his authority and, in fact, had a duty to order the correction when the inconsistency was identified. Yet, the verdict was patently inconsistent that jurors found liability and awarded punitive damages without awarding compensatory damages, but the court did not send the jury back for further deliberations, [f] Plaintiffs [sic] raised the issue that Question 5 of the jury instructions were [,sic] ambiguous, inconsistent, compound, and confusing.” The trial court refused plaintiff’s suggestions to simply throw out the jury’s answer to this question.

On September 29, 2006, plaintiff filed a notice of appeal from the judgment and related prior rulings.

At a hearing on October 19, 2006, the trial court deemed the Gustafson motion to be one seeking a new trial. As quoted in the introduction, the court granted a new trial as to the issues of compensatory damages, punitive damages, and the corporate and individual standing of Gustafson.

On December 18, 2006, plaintiff filed a notice of appeal from the ruling granting a new trial. On December 26, 2006, Gustafson and the Tamarind Group, Inc., filed an appeal from the order denying their motion for a judgment notwithstanding the verdict, and a cross-appeal from the order granting plaintiff’s motion for new trial.

V. The Impact of the Jury’s Special Verdict on Abatability

A. The Denial of Defendants’ Motion for Judgment

On appeal, defendants argue that there was no basis for ordering a new trial on the issue of compensatory damages, because the special verdict established that plaintiff is seeking relief for a permanent nuisance and the statute of limitations has lapsed on this cause of action. This is the same argument supporting their motion for a judgment notwithstanding the verdict.

As the California Supreme Court has explained in Sweatman v. Department of Veterans Affairs (2001) 25 Cal.4th 62, 68 [104 Cal.Rptr.2d 602, 18 P.3d 29]: “A trial court must render judgment notwithstanding the verdict whenever a motion for a directed verdict for the aggrieved party should have been granted. (Code Civ. Proc., § 629.) A motion for judgment notwithstanding the verdict may be granted only if it appears from the evidence, viewed in the light most favorable to the party securing the verdict, that there is no substantial evidence in support. (Hauter v. Zogarts (1975) 14 Cal.3d 104, 110 [120 Cal.Rptr. 681, 534 P.2d 377].) [¶] The moving party may appeal from the judgment or from the order denying the motion for judgment notwithstanding the verdict, or both. (Code Civ. Proc., § 904.1, subd. (a)(4) [making such an order appealable].) As in the trial court, the standard of review is whether any substantial evidence—contradicted or uncontradicted— supports the jury’s conclusion. (Ibid.; Hauter v. Zogarts, supra, 14 Cal.3d at p. 111.)”

As mentioned in the introduction, California law distinguishes between continuing and permanent nuisances. “ ‘Whether contamination by toxic waste is a permanent or continuing injury . . . tum[s] on the nature and extent of the contamination.’ [Citation.] ‘[T]he crucial test of the permanency of a trespass or nuisance is whether the trespass or nuisance can be discontinued or abated.’ [Citation.]” (Mangini II, supra, 12 Cal.4th 1087, 1097, quoting Mangini v. Aerojet-General Corp. (1991) 230 Cal.App.3d 1125 [281 Cal.Rptr. 827] (Mangini I).) In Mangini II, the California Supreme Court adopted the opinion of the appellate court that “ ‘abatable’ means that the nuisance can be remedied at a reasonable cost by reasonable means.” (Mangini II, supra, 12 Cal.4th at p. 1103.) When a nuisance is continuing, the injured party is entitled to bring a series of successive actions, each seeking damages for new injuries occurring within three years of the filing of the action, which damages do not include decrease in the property’s market value. When a nuisance is permanent, the injured party is entitled to claim all current and future damages, but must do so in one action (Spaulding v. Cameron (1952) 38 Cal.2d 265, 267-268 [239 P.2d 625]) and plaintiffs must bring suit for permanent nuisance within three years of obtaining notice of the contamination of their property. (Mangini II, supra, 12 Cal.4th at pp. 1096, 1103.)

In Mangini II, the jury was instructed about the difference between continuing and permanent nuisances and that it was the plaintiffs’ burden to prove that the nuisance of which they complained, contamination of their property by solid fuel waste materials, was a continuing nuisance. (Mangini II, supra, 12 Cal.4th 1087, 1096-1097.) “The jury was also instructed that ‘abatable’ meant that the contamination could be removed without unreasonable hardship and expense.” (Id. at p. 1097.) The jury found the existence of a continuing nuisance and awarded damages of $13,232,000. (Id. at pp. 1093-1094.) The California Supreme Court upheld the conclusion of the Court of Appeal that the trial court should have granted the defendant’s motion for judgment notwithstanding the verdict. (Id. at p. 1090.)

In Mangini II, supra, 12 Cal.4th 1087, “Plaintiffs’ attorney conceded these uncertainties in the cost of cleanup in his closing remarks to the jury: ‘[N]obody really knows how much is there, where it is, what the chemicals are, or how much it’s going to cost to abate the chemicals,’ he stated. ‘So I guess the bottom line, if you ask yourself the question, how bad really is this site, the answer’s got to be you just don’t know.’ ” (Id. at p. 1095.)

The court observed: “As we have recounted, plaintiffs freely admit the absence of evidence to show the extent of the contamination, [f] The result of the uncertainty regarding the extent of contamination is that it is uncertain whether the nuisance is abatable. Thus, we do not know how much land or water has to be decontaminated. We do not know how deep the decontamination would have to go. We have no idea how much it would cost but know only that it would cost unascertainable millions of dollars, [f] On this record, there is no substantial evidence that the nuisance is abatable.” (Mangini II, supra, 12 Cal.4th at p. 1103.) Since the nuisance was permanent, the plaintiffs’ lawsuit, filed in January 1988, was barred by the statute of limitations, as they were aware at least by 1984 of the contamination of their property. (Id. at p. 1096.) “Because, as the Court of Appeal put it, plaintiffs’ proof established that ‘no one knows how bad the contamination is or how to remedy it,’ it followed that plaintiffs had failed to present substantial evidence that the contamination was capable of being abated at a reasonable cost. And because the answer to the question whether a particular nuisance is continuing or permanent is whether it is ‘abatable’—reasonable cost being a component of ‘abatability’—plaintiffs had failed to make their case. It followed that their claims for damages were barred by the three-year statute of limitations prescribed by Code of Civil Procedure section 338, subdivision (b)____” (Id. at pp. 1095-1096.)

We note that the holding of Mangini II is narrow. It was not that soil and groundwater contamination from migrating hydrocarbons is inherently a permanent and not a continuing nuisance. It was simply that when the plaintiff fails to prove such contamination is reasonably abatable, it may be deemed a permanent nuisance. This narrow holding suggests that, had the plaintiffs in Mangini II been able to prove reasonable abatability, the nuisance would have been regarded as continuing. For purposes of our analysis, we will assume, without deciding, that the ongoing migration of contamination released into the soil long ago may be a continuing nuisance when there is evidence that it is reasonably abatable.

In our case, special verdict question No. 5 focused the jury’s attention on what Mangini II identified as the distinguishing criterion between a permanent and a temporary nuisance, namely whether the condition of plaintiff’s property could “have been repaired or abated by reasonable means and at a reasonable cost.” The jury’s conclusion that it was unknown whether the soil contamination could be abated by reasonable means at a reasonable cost means that plaintiff had failed to prove her claims of continuing nuisance and trespass.

On appeal, plaintiff seeks to distinguish Mangini II on the basis that “there was evidence presented on the reasonableness of abatement.” She “also provided evidence of the costs of abatement.”

Regarding those costs, in her reply brief Attorney Clack characterized the DMC Construction estimate for excavation of the downhill property as of “critical importance to evidence of cost of abatement.” She acknowledged that the costs in that estimate were excluded from evidence. Indeed, that is one of her claims of error on appeal.

However, later in the brief, Clack asserts, referencing her own quotation of the estimate during the motions in limine hearing, “McCoy’s experts offered expert testimony of soil quantity to be removed, ‘800 cubic yards to a ‘depth of 10 foot [sic\ below grade’ ... ‘to approximately 6 feet below grade at the base of the retaining wall, resulting in 120 cubic yards of soil being removed’.” In this statement, Clack seems to be suggesting that this estimate was before the jury. However, later on the same page of her brief, plaintiff concedes that the jury did not see this cost estimate. She asserts that she “introduced evidence of other costs, if not the cost of the estimate for excavation prepared for Polvado by DMC Construction.” Here she refers to the costs mentioned in her argument to the jury, including the projected charges of $8,740 by Bums for reviewing the remedial plans submitted to the Water Board, inspecting the area, and reviewing the remedial work, the projected charges of $20,500 by Salem Engineering for its part in replacing the retaining wall, and Gustafson’s costs in 1993 of $104,185.52 for excavating the adjoining property.

This argument is simply argument. There was no expert testimony that the charges for excavation were the same at trial in 2006 as they were in 1993. There was no expert testimony describing or even estimating how wide or deep the contamination on the downhill property was or how much soil would have to be excavated. There was no expert testimony about the costs of lifting the house on the property, excavating the soil underneath it, backfilling the soil, and replacing the house. There was no expert testimony about how much it would cost to completely prevent further migration of oil from the laundry property. “Abatable” for these purposes does not mean by any conceivable means at any cost, but by reasonable means at a reasonable cost.

Clack admitted during the motions in limine hearing that plaintiff’s experts were not hired to estimate the cost of remediating the downhill property. It is not surprising that they did not testify at trial about what the cost would be, let alone whether it would be reasonable. As defendants argue, “There was simply no admissible evidence of either the scope of a remediation plan or of the cost of such a plan, let alone any judgment from someone capable of making such judgments of whether such a plan and its cost would be reasonable.” The jury reached the unavoidable conclusion based on this failure of proof that it was unknown whether the contamination of the soil on the downhill property could be abated by reasonable means at a reasonable cost.

Plaintiff argues that the nuisance was abatable under other cases that were unconcerned with the cost of ab