Maryland High Court Vacates $1 Billion In Punitive Damages In Gasoline Leak

Maryland High Court Vacates $1 Billion In Punitive Damages In Gasoline Leak

BALTIMORE - (Mealey's) Saying plaintiffs claiming contamination of their properties with benzene and methyl tertiary-butyl ether (MTBE) from a leak at an Exxon Mobil Corp. tank farm outside Baltimore failed to prove the fraud necessary to support an award of punitive damages, Maryland's highest court on Feb. 26 set aside most of a $1 billion punitive damages verdict (Exxon Mobil Corporation v. Thomas M. Albright, et al., No. 15 September Term, 2012, Md. App.).

(Opinion available. Document #83-130327-001Z.)


"We need not consider whether the amorphous concept of remediation fraud violated Exxon's due process rights," the Maryland Court of Appeals said in vacating more than $1.045 billion in punitive damages awarded after a six-month trial in 2011. "Upon our review of Appellees' testimony, we conclude that the Appellees' claims for remediation fraud suffer from various deficiencies of proof."

"Even for those Appellees who could demonstrate the falsity of a statement, no Appellee proved by clear and convincing evidence detrimental reliance," the panel said. "Most Appellees did not demonstrate any change in behavior resulting from any of the allegedly false statements - for example, few changed (or did not change, as applicable) their water consumption habits in response to the assumedly false statements or in response to their discovery of the assumed falsity of the gasoline recovery estimates."

General Dissatisfaction

"Appellees' proof, rather than proving fraud, demonstrates a general dissatisfaction with Exxon's remediation efforts. The shortcomings in Exxon's remediation efforts (and reporting) simply do not rise to the level of fraud, however."

The panel also remanded $495 million in compensatory damages for further consideration, saying plaintiffs' expert John Kilpatrick did not rely on comparable sales data, although such data were available in the area affected by the leak. Instead, the panel said, Kilpatrick assessed a blanket and permanent diminution figure of 60 percent as of February 2006 - regardless of the properties' proximity to the spill and whether wells on the properties tested positive for MTBE or benzene. Some plaintiffs won compensation, although their wells were not contaminated, the panel said.

466 Residents

The suit was filed by 466 residents of rural Jacksonville in Baltimore County stemming from a gasoline leak that, because of a variety of mistakes by Exxon Mobil and contractors, continued for 37 days, sending more than 26,000 gallons into groundwater in a neighborhood dependent on well water.

In a related case, the appeals court yesterday remanded the claims of 84 households and $147 million in compensatory damages that was cut by more than half by the Maryland Court of Special Appeals (Exxon Mobil Corporation v. Paul D. Ford, et al., No. 16, September Term, 2012, Md. App.) with the instruction that the trial court conduct individual assessments of each property's diminution of value.

(Opinion available. Document #83-130327-002Z.)

In both cases, the panel said plaintiffs had not shown enough evidence of exposure to justify compensation for emotional stress or for the cost of medical monitoring.

The opinions are by Judge Glenn T. Harrell Jr. and concurred in by Chief Judge Robert M. Bell and Judges Lynne A. Battalion, Clayton Greene Jr., Mary Ellen Barbara, Robert N. McDonald and John C. Eldridge, retired, specially assigned.

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