Black Hawk, S.D. — In the spring of 2019, a sudden sinkhole emergence in a residential area of Black Hawk drew immediate concern from the community. The incident exposed a significant risk for numerous homeowners in the Hideaway Hills neighborhood, revealing that the land beneath their homes, formerly a gypsum mine, could potentially collapse.
Following the discovery, residents quickly mobilized to file a class action lawsuit against the state of South Dakota, citing a lack of proper geological assessments prior to the neighborhood’s development. Represented by the national law firm Fox Rothschild, the homeowners are seeking compensation through a claim of inverse condemnation, arguing that the state’s negligence has rendered their properties unsalable and ineligible for insurance or mortgages.
According to Kathleen Barrow, a partner at Fox Rothschild, the gravity of the situation leaves residents in a dire situation. “Our clients are essentially stuck with properties they cannot sell, insure, or even refinance,” Barrow explained. “Their primary demand is to recover the investment on their homes if the issue cannot be rectified.”
Currently, the situation directly impacts 12 homes that have been marked within an evacuation zone, with an additional 158 properties also identified as at risk of collapsing. Evidence gathered for the lawsuit recently culminated with the plaintiff’s attorneys filing for a summary judgment this past Monday, which would push the case towards a jury trial to determine damages.
Barrow highlighted the distinct threats posed by the underground gypsum. “When gypsum is crushed into a powder and comes into contact with water, it can compress dramatically, leading to what we observe as collapses,” Barrow said. “Alternatively, subsistence can cause depressions or holes to emerge on the surface – both phenomena have been noted in this case.”
The judicial decision on whether to proceed with a summary judgment is pending, and if approved, the case will move forward to the jury phase slated for April 2025 to address the damages incurred by the homeowners.
This lawsuit marks a critical point of contention over the responsibilities of state authorities in ensuring the safety and viability of land developments, particularly those with complex geological histories like that of the gypsum mine under Hideaway Hills.
The outcome of this case may set a pivotal legal precedent on how geological risks are managed and disclosed in real estate developments across the region, highlighting the need for rigorous environmental and geological assessments before residential projects are approved. Homeowners in Black Hawk continue to face uncertainty as they await the next steps in their legal battle to secure compensation for their jeopardized properties.