STANTON L. BLACK & others [Note 1] vs. COASTAL OIL NEW ENGLAND, INC.

JACOBS, J. The plaintiffs have been owners, since 1983, of

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industrial property in Malden (the site). In 1990, [Note 2] they filed a complaint in the Superior Court seeking damages from the defendant pursuant to G. L. c. 21E, the Massachusetts Oil and Hazardous Material Release Prevention Act, for contamination of the site. The contamination occurred between 1929 and 1975 during the operation of a fuel storage and distribution business by a company whose liabilities were ultimately assumed by the defendant in the course of a corporate merger. Following a jury-waived trial, judgment was entered awarding the plaintiffs $13,320.39 for response costs under G. L. c. 21E, s. 4, $2,190,000 for damages to their realty under G. L. c. 21E, s. 5, and $246,035.48 in fees and costs under G. L. c. 21E, s. 15. We affirm in part and reverse in part.

It is undisputed that the defendant is responsible for the "release" at the "site" of "oil" and "hazardous material" as those terms are defined in c. 21E, s. 2, and that the plaintiffs are innocent of any such responsibility. Also, the defendant does not contest the damages awarded under G. L. c. 21E, s. 4, for response costs properly incurred and expended by the plaintiffs. [Note 3] Only the awards under G. L. c. 21E, s. 5 and 15, are at issue. [Note 4]

1. Section 5 damages. General Laws c. 21E, s. 5(a)(5)(iii), as inserted by St. 1983, c. 7, s. 5 (s. 5), establishes private party liability "for damage to . . . real or personal property incurred or suffered as a result of [a] release [of oil or hazardous material] or threat of [such] release." Before trial, the judge denied the defendant's motion to bar any reliance by the plaintiffs on claimed, but not incurred, future costs of cleaning up the site. The defendant argued in the motion that as a "matter of law, the plaintiffs may not recover under Chapter 21E for any of their claimed future costs." At trial, the judge credited the testimony of the plaintiffs' expert witnesses, which he summarized in the following findings of fact:

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"[T]he contamination at the site is reasonably curable, and can be remediated at a reasonable cost with reasonable certainty.

"The cost for . . . groundwater . . . remediation is approximately $160,000 . . . . The total estimated cost to clean up the 5,400 cubic yards of contaminated soil at the site is approximately $2,000,000. This figure includes excavation, stockpiling, loading into trucks and restoration . . . at approximately $65 per cubic yard; the transportation of the contaminated soil at approximately $150 per cubic yard; and disposal . . . at approximately $50 per cubic yard. [Note 5] The total cost estimate also includes an amount for contingencies and also an engineering charge. . . . Additional testing is needed . . . [at an] approximate cost . . . of $30,000. Thus, the total cost of remediating the site . equals $2,190,000.

"The site property is income producing real estate with an annual income of approximately $300,000 under a triple net lease, in which the tenant pays all operating costs . . . . The current tenant . . . is pleased with the . . . building . . . and plans to remain on a long-term basis at no less than the current lease. [Note 6]

"Capitalizing the $300,000 annual rental income at the nine percent capitalization rate, the value of the site property . . . if it were free and clear of contamination is $3,300,000.

"Properties with contamination would he sold well below their fair market value.

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"Plaintiffs have suffered a diminution in the value of the site equal to the cost of cleaning the property of all contamination, leaving the property worth only $1,140,000.

"The expenditure of $2,190,000 for remediation will completely restore the site to its full market value in an uncontaminated state.

"Remediation of the site is a fair and reasonable valuation of damages, because the cost of cleaning up the property is not disproportionate to the fair market value of the property if it were free and clear of contamination."

In his conclusions of law, the judge, relying on Guaranty-First Trust Co. v. Textron, Inc., 416 Mass. 332 (1993) (Guaranty), ruled that s. 5 of c. 21E "allows an injured property owner to bring suit regardless of whether costs have already been incurred." Id. at 338. He stated, quoting from Guaranty, supra at 333, that "[t]he measure of recovery under G. L. c. 21E, s. 5(a)(iii), is identical [to that] . . . at common law for damage to real or personal property." Relying further on Guaranty, supra, he determined that measure to be "diminution in market value" and concluded, purportedly relying on Mailman's Steam Carpet Cleaning Corp. v. Lizotte, 415 Mass. 865 (1993) (Mailman's), that "[t]he cost to clean up the site is a proper measure for valuing the diminution in market value."

We agree with the defendant's contention that it was error to award s. 5 damages based solely on future cleanup costs. Unassisted by the statute, which is silent with respect to the measure of damages, the judge adopted an application of s. 5 that fails in several respects. It ignores the observation in Mailman's, supra at 873-874, later reinforced in Martignetti v. Haigh-Farr, Inc., 425 Mass. 294, 299 (1997), that a "person liable for cleanup under s. 5 can sue other liable parties under s. 4 for reimbursement of cleanup costs already paid, but cannot sue under s. 5(a)(5)(iii) to recover costs not yet incurred." [Note 7] Cleanup or "response" costs include costs of assessment, containment, and removal. See G. L. c. 21E, s. 2. Prior payment is a

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prerequisite for reimbursement. Oliveira v. Pereira, 414 Mass. 66, 73-74 (1992). Only after the addition of G. L. c. 21E, s. 4A, see St. 1992, c. 133, s. 294, has a private party who is liable under s. 5 been able to seek contribution toward future response costs before commencing cleanup and then only after complying with comprehensive notice and dispute resolution procedures. "Prior to the addition of this section, a private party was limited to bringing an action for reimbursement of cleanup costs under s. 4." Mailman's, supra at 874 n.8. [Note 8]

The plaintiffs argue that they did not seek future cleanup costs in their s. 5 claim and that the judge merely utilized those costs in measuring property damage under that section. The difficulty with that argument is that the judge, in applying those costs, erroneously conflated inapposite common law concepts in arriving at his decision.

Because s. 5 is silent as to how to measure the damages for the private right of action created by it, we look to the common law for guidance. [Note 9] Guaranty, supra at 336. At common law, the measure of damages to real property is dependent upon whether "the injury is permanent" or "reasonably curable by repairs." Belkus v. Brockton, 282 Mass. 285, 287-288 (1933). See Guaranty, supra at 336-337. [Note 10] When the injury is permanent, the appropriate measure of damages is diminution of value determined by "the difference in the fair market value of the injured premises before and after the injury." Belkus v. Brockton, supra. When the injury is temporary, that is, "reasonably curable by repairs, the expense of repairs, if less than the diminished market value, is the measure of recovery." Id. at 288. See Guaranty, supra at 337. Accordingly, diminution in

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value analysis generally [Note 11] has no place in assessing the cost of remediation for temporary injury. [Note 12] As we have indicated, to the extent that the expense of cleanup was recoverable at the time of this action, that recovery could be pursued only under s. 4.

The rationale for the distinction between temporary and permanent injury has particular validity in contamination cases, since remediation essentially results in the restoration of the property to its predamage value. Mailman's, supra at 871. See Cox & Bachrach, Damages for Contaminated Property, 37 Boston Bar J. 19 (July/August 1993). The distinction, both theoretically and under our interpretation of G. L. c. 21E, s. 4 and 5, guards against the possibility of duplicative damages, a result traditionally resisted in our law. See Crowley v. J C. Ryan Constr., Inc., 356 Mass. 31, 36 (1969). Here, the evidence amply supports the judge's finding that "the contamination at the site is reasonably curable, and can be remediated at a reasonable cost with reasonable certainty." Given this determination, his venture into diminution of value analysis is inappropriate with respect to a private party claim under s. 5. Our interpretation reserves to s. 5 not only actions for permanent injury but also actions for the incidents of cleanup such as related restoration and repair work and lost rental value suffered during the cleanup and repair period. Guaranty, supra at 338-339. No evidence of such consequential damage was offered by the plaintiffs.

Even if we put aside the judge's determination that the contamination is reasonably curable, and treat his use of diminu-

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tion of value analysis as implicitly reflecting a finding that the injury to the site is permanent, the method under which he assessed damages nevertheless is erroneous. By definition, the measure of damages for permanent injury precludes evidence of the future cost of remediation of that injury. That error was compounded by the findings that anomalously adopted an income capitalization method of valuing the site, as if "free and clear of contamination," which utilized a rental income stream without taking into account whether the rental value, see note 5, infra, as reflected by that income stream, may have been affected by knowledge of the contamination.

2. Attorney fees and costs. Section 15 of c. 21E, as inserted by St. 1986, c. 554, s. 3, provides in pertinent part: "In any suit . . . to enforce the requirements of [c. 21E], . . . the court may award costs, including reasonable attorney and expert witness fees, to any party . . . who advances the purposes of this chapter." Those purposes, aside from improving "the Commonwealth's capability to respond to environmental contamination," Guaranty, supra at 335, are "to compel the prompt and efficient cleanup of hazardous material," Sheehy v. Lipton Indus., Inc., 24 Mass. App. Ct. 188, 197 (1987), and to enable private persons "to obtain a certain measure of compensation for loss resulting from environmental damage." Guaranty, supra at 335. Given our decision that the plaintiffs have not established a compensable loss under s. 5, the purposes of that section were not advanced by the plaintiffs' complaint. Notwithstanding that the plaintiffs undertook assessment measures soon after they became aware of pollutants on the site in April of 1988, there is no indication in the record that any site cleanup had been undertaken at the time of trial in 1992, or even in 1994 when the parties filed requests for findings and rulings. [Note 13] Moreover, the testimony of one of the plaintiffs' experts casts doubt over whether the Commonwealth was pursuing the cleanup of the site or had any plans to do so.

The ruling that the plaintiffs are entitled to G. L. c. 21E, s. 4, response costs in the amount of $13,320.39 raises a different is-

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sue with respect to costs and attorney fees. Although the plaintiffs' recovery of s. 4 fees and costs properly was limited, see note 3, infra, their efforts at assessing the extent of the contamination of the site were, nevertheless, within the statutory remediation scheme of c. 21E. We therefore conclude "that any person who undertakes assessment . . . activities as defined in [c. 21E], and subsequently seeks reimbursement pursuant to G. L. c. 21E, s. 4, enforces and advances the purposes of [that chapter]." Sanitoy, Inc. v. Ilco Unican Corp., 413 Mass. 627, 632 (1992). Accordingly, the plaintiffs are entitled to recover, pursuant to s. 15, all costs and attorney fees related to their proof and recovery of s. 4 response costs incurred by them. Because the record is not susceptible of separating the s. 4 costs and fees from those incurred with respect to s. 5, the matter of the plaintiffs' entitlement under s. 15 must be resolved by the Superior Court.

The judgment is affirmed with respect to the $13,320.39 award for response costs under G. L. c. 21E, s. 4, and reversed with respect to the award for damages to property under G. L. c. 21E, s. 5(a)(5)(iii). Judgment shall enter for the defendant on the plaintiffs' claim for damages under s. 5. That portion of the judgment awarding the plaintiffs fees and costs is vacated, and the case is remanded to the Superior Court for determination of fees and costs under G. L. c. 21E, s. 15, consistent with this opinion. The order denying the defendant's motion for a new trial is affirmed. The plaintiffs' request for attorney fees and other costs on appeal is denied.

So ordered.