Exxon Mobil Corp. v. Albright

433 Md. 303

71 A.3d 30

EXXON MOBIL CORPORATION

v.Thomas M. ALBRIGHT, et al.

No. 15 Sept. Term 2012.

Court of Appeals of Maryland.

Feb. 26, 2013.

Charles P. Scheeler (John E. Griffith, Jr. and Jeffrey D. Herschman of DLA Piper LLP (US), Baltimore, MD), on brief, for Appellant.

Ava E. Lias–Booker (McGuire Woods LLP, Baltimore, MD; James F. Sanders and Thomas H. Dundon of Neal and Harwell, PLC, Nashville, TN), on brief, for Appellant.

Paul D. Raschke (H. Russell Smouse and M. Albert Figinski of Law Offices of Peter G. Angelos, P.C., Baltimore, MD), on brief, for Appellee.

Argued before BELL, C.J., HARRELL, BATTAGLIA, GREENE, BARBERA, McDONALD and JOHN C. ELDRIDGE (Retired, Specially Assigned), JJ.

HARRELL, J.

On 17 February 2006, Appellant, Exxon Mobil Corporation (“Exxon”), reported a leak of approximately 26,000 gallons of gasoline from the underground tanks at its fueling station located in Jacksonville, Maryland.¹ The seemingly cursed Jacksonville community, the unfortunate site of multiple gasoline leaks over the years, see, e.g., Exxon Corp. v. Yarema, 69 Md.App. 124, 516 A.2d 990 (1986) (noting that in the early 1980s, three gasoline stations located along Jarrettsville Pike in Jacksonville experienced underground gasoline tank leaks), is reliant largely on private wells, rather than municipal supply sources, for its potable water. Thus, following the 2006 release into the underground aquifer serving certain of those wells, 466 residents and business proprietors of Jacksonville (hereinafter referred to collectively as “Appellees”) filed the present suit against Exxon for asserted damages stemming from the contamination of their water supply, other consequential effects, and alleged misrepresentations by Exxon. The result was a jury award of $496,210,570 in compensatory damages and $1,045,550,000 in punitive damages for Appellees. Exxon appealed both the compensatory and the punitive damages awards as to all recovering plaintiffs, which were based on claims sounding in fraud, emotional distress for fear of contracting cancer, medical monitoring, emotional distress for fear of loss of property value, diminution in value of real property, and loss of use and enjoyment of real property.

FACTS AND PROCEDURAL HISTORY

Exxon purchased the property located at 14258 Jarrettsville Pike in Phoenix, Maryland, in 1981 for the construction of a new gasoline fueling station (“the Jacksonville Exxon”). Exxon was granted initially a construction permit in 1981. It applied for an extension of the life of the construction permit in 1983. Upon its application for extension, however, the Baltimore County Health Department expressed its formal opposition due to pre-existing contamination of the underground water supply stemming from prior leaks in the surrounding area. As a result, the Baltimore County Office of Permits and Licenses denied Exxon's request.

Exxon appealed the denial to the Baltimore County Board of Appeals. At a 24 August 1983 hearing before the Board, an environmental engineering specialist for Exxon, Frederick M. Anderson, testified regarding, among other things, the ongoing remediation efforts for the three prior spills in the community. During his testimony, Anderson described the containment prevention features of the proposed underground fuel storage system at the new station, stating that Exxon was “planning to really take some extraordinary measures” in constructing the underground storage system. Specifically, he asserted that Exxon planned to construct secondary containment measures at the Jacksonville Exxon station, including (1) fiberglass tanks and fiberglass lines; (2) sloped concrete troughs under the product lines running from the dispensers back to the tank field; (3) a polymer-coated polyester lining under the entire tank field; and (4) an observation well that would extend nearly to the bottom of the tank field. In response to concerns regarding potential repeated contamination in the wake of the prior gasoline leaks, Anderson opined that the proposed Jacksonville design ensured that the station would not be a source of contamination. He also conceded, however, that “[a]nything is possible.” The Board granted to Exxon the construction permit on 20 October 1983.

During the construction process, Exxon elected to depart from the containment design plans described by Anderson.² Rather than installing the tank field liner and single-walled tanks, Exxon installed instead newly-available, double-walled, fiberglass Buffhide tanks, fabric-lined product lines, and a plastic overliner. The Jacksonville Exxon station opened for business on or about 1 November 1984. The station was retrofitted with additional protective features in 1992, made in response to enactment of amendments in 1990 to the federal Clean Air Act.³ Evidence was submitted at trial suggesting that, during the retrofitting construction, the plastic overliner containment system was destroyed and was not repaired subsequently. Nevertheless, the Jacksonville Exxon station was operated for its owner by Storto Enterprises, Inc. without a harmful incident for over twenty years.⁴

On 13 January 2006, an employee from Crompco Corporation, an Exxon contractor, drilled unknowingly, while performing maintenance on the “ super unleaded grade” containment sump, a hole in the underground fiberglass “ regular grade” gasoline feed line leading from one of the gasoline storage tanks to the pumps.⁵ This hole, approximately 3/16 inch in diameter, was detected duly by an electronic leak detection system,⁶ which signaled an alarm inside the station and at the central monitoring service, Gilbarco Veeder–Root,⁷ indicating a catastrophic line failure.⁸ The leak detection system shut down automatically the regular unleaded gasoline product line. Contractors from Alger Electric, Inc. (“Alger”) were sent to the Jacksonville Exxon station to investigate the cause of the alarm. They concluded (incorrectly) that no actual leak existed. Rather, the technicians concluded that the alarm resulted from a problem with a submersible pump motor. After replacing the motor, the Alger technicians recalibrated the leak detection system (incorrectly), such that the alarm system could no longer detect the actual leak when the fuel system was reactivated.

As a result of this confluence of events, the leak continued uninterrupted without activating the alarm system. Andrea Loiero, the station operator, noticed inventory discrepancies following the incident on January 13. Loiero testified that, although she realized in January that she had an inventory problem, she did not know that the daily inventory variances resulted from a leak. On 16 February 2006, Loiero reported the discrepancies in her gasoline inventory to Exxon employee Russ Bowen, at which time the fuel system was shut down and the station closed. A sign posted on the property stated, “Please excuse our appearance, we are working to serve you better. Fueling facilities are temporarily closed for upgrade.” ⁹ Following a manual precision line test, which the regular gasoline line failed on February 17, Exxon reported the gasoline release to the Maryland Department of the Environment (“MDE”), informing it of both the leak and the lost product amount. By then, over 26,000 gallons of gasoline were released into the underground environment by the Jacksonville Exxon station.

After notifying the MDE of the leak, Exxon held multiple public meetings in the Jacksonville community to inform residents of the situation, beginning with a previously-scheduled meeting of the Greater Jacksonville Neighborhood Association on February 21. The presentations, conducted by both Exxon and MDE officials, included information regarding the projected migration of the gasoline plume within the underground aquifer. Specifically, Exxon and the MDE predicted that, because of the hydrogeology of the area, the contamination would remain concentrated within a half-mile radius along a line running northeast and southwest from the station, which they termed the “strike line.” ¹⁰ Baltimore County notified individuals residing or operating businesses within a half-mile radius of the station of the leak. The MDE maintained a website on which it posted information regarding the remediation efforts and all well test results. Some residents outside of the area predicted initially to be contaminated, however, ultimately suffered water contamination.

The MDE is responsible for supervising Exxon's remediation efforts, pursuant to a Consent Decree entered in September 2008.¹¹ The MDE will determine when Exxon has completed its remediation obligations under the Consent Decree. During the remediation process, the MDE directed Exxon's investigation of the severity and scope of the leak, as well as in drilling and sampling monitoring and recovery wells. Exxon also submitted weekly site status reports to the MDE. Exxon has installed over 225 monitoring and recovery wells in the Jacksonville area, and, as of the time of trial, spent over $46 million on remediation.

Additionally, in accordance with the MDE's directives, Exxon provided written updates to residents and government officials regarding the progress of the remediation efforts, including the amount of gasoline recovered. In March and April of 2006, Exxon distributed estimates of how much gasoline had been recovered to Jacksonville residents. After discovering an error in the recovery calculations, Exxon advised residents of the error in April 2006, and submitted corrected estimates to the MDE on 29 June 2006. Exxon and its contractors provided residents with test results from their individual potable wells (where applicable), along with information regarding the drinking water guidelines promulgated by the MDE, and installed POET systems ¹² where it and the MDE deemed necessary. Exxon also delivered voluntarily, for a limited period of time, bottled water to those residents whose wells were being...