Punitive Damage Award Thrown Out in Gas Leak Case

Published on Apr 9, 2013 at 2:26 pm in General Blogs.

Following the presentation of evidence on the issue of punitive damages, a Baltimore, County jury returned an award for punitive damages totaling $1,045,550,000 in Exxon Mobil Corporation v. Albright, et al. and its companion case, Exxon Mobil Corporation v. Ford, et al. The award was made in lawsuits brought by Jacksonville, Maryland homeowners and businesses after their wells were contaminated by a gasoline leak from a nearby Exxon gasoline station. But, Maryland’s top court threw out the entire award, finding that the underlying legal rationale for the huge award was lacking. “Because we reverse the verdicts as to each of the alleged instances of fraud submitted to the jury, the award to [the plaintiffs] of punitive damages must be reversed as well,” the Court of Appeals wrote.

Damages is the financial compensation given to one who has been injured by another. There are several different types. Actual or compensatory damages are those that flow from the wrong and, in general, put the wronged person in the place they would have been in had the harm not occurred. Punitive damages are damages awarded in addition to the actual damages. They are a form of punishment to the wrongdoer. Actual damages must exist before punitive damages will be found and then they will only be awarded in instances of malicious and willful misconduct.

A 1992 case is important in the determination of punitive damages. In Owens-Illinois Inc. v. Zenobia, Maryland’s top court noted that punitive damages may be awarded only where the plaintiff has established that the defendant’s conduct was characterized by evil motive, intent to injure, ill will, or fraud, that is, actual malice. In Zenobia, the Court of Appeals eliminated one legal standard — gross negligence – and replaced it with another – actual malice. Actual malice is generally defined to include fraud, ill will, intent to injure, etc. Zenobia is an example of a sudden reversal of longstanding common law. The court’s decision took plaintiffs’ attorneys by complete surprise.

In this instance, the Jacksonville, Maryland businesses and homeowners successfully argued before the jury that Exxon perpetuated an ongoing fraud designed to deceive both public authorities and the community, beginning with the construction of the containment system for the Exxon gas station and continuing through the remediation efforts following the discovery of the leak. However, relying on Zenobia, the Court of Appeals reversed the jury’s decision, ruling that because fraud was lacking, it also had to reverse the award for punitive damages.

The Court of Appeals has made clear in a series of opinions over the last 15 years in the wake of Zenobia that the egregious conduct must be directed specifically toward the plaintiff as opposed to that which directly or indirectly impacts the plaintiff but is not personal to him/her. The Exxon Mobil cases elaborate this concept.

Reversal of punitive damages has become a trend in the Maryland court system. Over the past 25 years, the Court of Appeals has dramatically restricted the instances when a jury may award punitive damages. Until the early 1990s, punitive damages could be awarded for conduct amounting to “gross negligence” including injuries caused by drunk drivers, knowingly operating an unsafe vehicle that causes an accident and other instances where the injury-causing conduct was more egregious than a simple accident.

Baltimore, Maryland-based Belsky, Weinberg & Horowitz has been fighting for clients who have been the victims of negligence for many years. Call us at 410-234-0100 or email us for a free consultation and let us help you.



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