Exxon Mobil Corp. v. Ford

EXXON MOBIL CORPORATION

v.PAUL D. FORD, ET AL.

No. 16

COURT OF APPEALS OF MARYLAND

September Term, 2012

Filed: February 26, 2013

Exxon Mobil Corporation v. Ford, et al., No. 16, September Term 2012.

CIVIL PROCEDURE - APPEALS - APPELLATE JURISDICTION - IN BANC DETERMINATIONS

Regardless of whether the in banc panel of the Court of Special Appeals lacked a concurrence of a majority of the entire court in reaching its decision, the Court of Appeals's grant of Respondents' and Petitioner's petitions for Writs of Certiorari enables the Court of Appeals to consider and decide all issues that would have been cognizable by the intermediate appellate court.

TORTS - DAMAGES - EMOTIONAL DISTRESS FOR FEAR OF DEVELOPING DISEASE

To recover emotional distress damages for fear of developing a latent disease based on a defendant's tortious conduct, a plaintiff must show that (1) he or she was exposed actually to the toxic substance due to the defendant's tortious conduct; (2) which led him or her to fear objectively and reasonably that he or she would contract a disease; and, (3) as a result of the objective and reasonable fear, he or she manifested a physical injury capable of objective determination.

TORTS - DAMAGES - MEDICAL MONITORING

A plaintiff may recover damages for medical monitoring costs, usually through the administration of an equitable fund, upon a showing of the following: (1) the plaintiff was exposed significantly to a proven hazardous substance through the defendant's tortious conduct; (2) as a proximate result of significant exposure, the plaintiff suffers a significantly increased risk of contracting a latent disease greater than the general public; (3) the increased risk makes periodic diagnostic medical examinations reasonably necessary; and, (4) monitoring and testing procedures exist which make the early detection and treatment of the disease possible and beneficial.

TORTS - DAMAGES - EMOTIONAL DISTRESS FOR FEAR OF INJURY TO REAL PROPERTY

A plaintiff may ordinarily recover emotional distress damages attendant to injury to real property only in the presence of fraud, malice, or like motives.

DAMAGES - INJURY TO REAL PROPERTY - DUPLICATIVE COMPENSATION PROHIBITED

Owners of real property are not precluded necessarily from recovering both permanent diminution in value and loss of use and enjoyment damages, provided that the injuries for which recovery is sought do not overlap, so as to result in duplicative compensation. Where an alleged loss of use and enjoyment is "not distinguishable from" and "subsumed in" a claim for diminution in value, the impaired market value of the real property presumably reflects the complete injury, and a plaintiff may not recover damages for both loss of use andenjoyment and diminution in value.

TORTS - INJURY TO REAL PROPERTY - NO PHYSICAL IMPACT TO LAND

In the absence of physical injury to real property resulting from a defendant's tortious actions, a plaintiff must demonstrate more than modest behavioral adjustments in his or her use of his or her real property in order to recover damages. Thus, a plaintiff who has not provided present proof of contamination must show more than a possibility of future contamination or mere annoyance in order to recover. Absent a substantial interference with a plaintiff's use and enjoyment of his or her land, any diminution in value suffered by a plaintiff is not compensable.

DAMAGES - INJURY TO REAL PROPERTY - LOSS OF USE AND ENJOYMENT

An award for compensatory damages must be anchored to a rational basis on which to ensure that the award is not merely speculative. In the context of damages for loss of use and enjoyment of real property, we determine that loss of use and enjoyment of real property cannot exceed the fair market, unimpaired value of the property at issue.

EXPERT TESTIMONY - VALUATION OF REAL PROPERTY

Expert testimony is required ordinarily to establish diminution in property value resulting from environmental contamination. Testimony of a real estate appraisal expert is admissible where he supported his assessments by various, but rationally-based, methodologies, despite the exclusion from ultimate consideration of comparable real estate market data.

LAY TESTIMONY - VALUATION OF REAL PROPERTY

Respondents' lay testimony as to their properties' diminution in value due to environmental contamination was not admissible or probative where Respondents testified that they believed their properties had decreased in value, but did not offer any substantive valuation or any specialized valuation expertise, and therefore did not support the actual damage awards made by the jury based on "zero sale value" of Respondents' properties.

Circuit Court for Baltimore County

Case # 03-C-06-010932

Bell, C.J.

Harrell

Battaglia

Greene

Barbera

McDonald,

Eldridge, John C. (Retired,

Specially Assigned)

JJ.

Opinion by Harrell, J.

FACTUAL BACKGROUND

This is a companion case¹ brought by residents of Jacksonville, Maryland,² againstExxon Mobil Corporation (Petitioner)³ for an underground gasoline leak from an Exxon Mobil-owned gasoline service station, located at the corner of Jarrettsville Pike and Paper Mill Road in the Jacksonville area of Baltimore County, that began on 13 January 2006.⁴ The leak detection system at the station failed to detect a punctured underground line leak, which caused a gasoline leak of approximately 26,000 gallons into the underground aquifer and resulted in the contamination of wells supplying water to a number of households overa period of more than thirty days.

On the record of this case, there is a dispute as to when the residents of the impacted Jacksonville neighborhood learned of the leak. While Exxon contends that it notified Herbert Meade, administrator for the oil control program in the Maryland Department of the Environment (MDE), of the spill on February 17, and that Meade contacted immediately the president of the local community association, Respondents maintain that they learned of the leak only after local media reported the story four days later.

Following notification of the leak, the MDE, pursuant to its statutory authority, ordered Exxon to submit an Interim Remedial Measure Plan. See Md. Code (1982, 2007), Environment Art., §§ 4-401-4-419. As part of its immediate remediation efforts, Exxon drilled wells for monitoring and recovery surrounding the proximate vicinity of the Exxon station. The monitoring wells were dug at various depths in order to conduct water samples indicating the presence and extent of the contamination, also known as the "strike line." The purpose of the recovery wells was to treat groundwater to prevent further expansion of the strike line. There were 227 monitoring wells installed by October 2007, and the MDE ordered an additional thirty wells in order to conduct long-term monitoring. Since February 2006, water samples have been taken from the monitoring wells and residential potable wells.

Respondents filed suit in the Circuit Court for Baltimore County against Exxon. Their claims alleged that their properties had decreased in value, and that their health was threatened as a result of exposure to toxic chemicals - specifically, methyl tertiary-butylether ("MTBE"), a possible carcinogen, and benzene, a known carcinogen⁵ - in the gasoline leak. The Respondents' alleged exposure arose from their use of water from the potable wells on their properties. The properties owned by Respondents were located at varying distances from the source of the leak. The overview of Respondents' claims and summary of the evidence at trial are discussed below.

PROCEDURAL BACKGROUND

I. Respondents' Claims

A single complaint was filed on 17 October 2006. Respondents, composed of eighty-seven households,⁶ sought compensatory and punitive damages based on allegations offraudulent concealment,⁷ intentional infliction of emotional distress, strict liability, trespass, private nuisance, and negligence.⁸ They sought punitive damages and three types of compensatory damages: (1) monetary damages for diminution in the fair market value of their real property; (2) non-economic damages for emotional distress, including fear of contracting cancer; and (3) damages for the costs of future medical monitoring.

The claims of intentional infliction of emotional distress were dismissed subsequently by all Respondents, but the trespass counts were dismissed by only some Respondents. Petitioner admitted liability for trespass, private nuisance, negligence, and strict liability, but denied liability for fraud and punitive damages. Petitioner further maintained that certain of the compensatory damages claimed - non-economic emotional distress damages arising from injury to property and fear of cancer, and damages for medical monitoring costs - were notcompensable under Maryland law.

The cases were consolidated by the Circuit Court for trial. On 14 October 2008, a jury trial began, presided over by the Honorable Maurice W. Baldwin, Jr., and lasted until 12 March 2009. Liability was not contested by Exxon, so the trial focused on whether any Respondents suffered compensable injuries as a proximate result of the leak and, if so, what compensatory damages should be awarded. The jury was asked also whether Exxon was liable for fraud warranting the award of punitive damages.⁹

II. Contamination of Wells on Respondents' Properties

Of the eighty-seven properties implicated in this case, water testing of the residential potable wells in 2006 indicated MTBE concentrations above the MDE action level of 20 ppb in only two.¹⁰ Exxon paid for the installation of point of entry treatment ("POET") systems to filter well water entering those homes. Measurable amounts of MTBE below 20 ppb were found in samples from potable wells on sixty-three of the plaintiffs' properties in 2006. By the time of trial, however, the most recent samples revealed no potable wells with MTBE concentrations exceeding 20 ppb.¹¹ Although five potable wells tested for detectable amountsof...