Exxon Corp. v. Yarema
1986 Md. App. LEXIS 414, 69 Md.App. 124, 516 A.2d 990 (1986)
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Rule of Law:
A punitive damage award is not subject to reduction or satisfaction by a settlement payment from a joint tortfeasor under the Uniform Contribution Among Tortfeasors Act. Furthermore, a plaintiff may recover in nuisance for substantial interference with the use and enjoyment of their land, even without a direct physical impact or trespass.
Facts:
- In 1965, Exxon Corporation installed three underground gasoline storage tanks at its service station in Jacksonville, Maryland.
- In March 1979, Exxon was notified that a tank was losing a significant quantity of gasoline, ultimately totaling at least 1,100 gallons. Exxon repaired the corroded tank but took no measures to recover the lost gasoline or prevent groundwater contamination.
- In late 1980, a second leak was suspected and confirmed in another tank, with a loss of at least 703 gallons. Exxon again repaired the tank but took no other remedial action.
- In May 1981, Baltimore County discovered that the local groundwater was contaminated with toxic chemicals found in gasoline, which originated from leaks at stations owned by Exxon, Amoco, and Gulf.
- Exxon's tests confirmed its contamination had spread to some neighboring properties, but not to the properties owned by S & S or Ascot's office building. The contamination of the Yaremas' property was disputed.
- Due to the contamination and the threat of it spreading, the Baltimore County Health Department imposed severe land-use restrictions on many properties, including those owned by the plaintiffs, prohibiting the use of well water and banning the sale of lots or issuance of building permits.
- The Yaremas and S & S received substantial settlement payments from other defendants, Amoco and Gulf, before a jury verdict was reached against Exxon.
Procedural Posture:
- Multiple plaintiffs, including the Yaremas and S & S, filed four separate tort suits against Exxon Corporation, Amoco Oil Company, Gulf Oil Corporation, and others for groundwater contamination.
- The cases were consolidated for trial in the court of first instance.
- The Yaremas and S & S entered into settlement agreements with Amoco and Gulf.
- The trial court dismissed the trespass actions of the Yaremas and S & S on summary judgment.
- Following a seven-week trial, a jury found Exxon liable to the remaining plaintiffs for negligence, nuisance, and strict liability, awarding both compensatory and punitive damages.
- After the verdict, Exxon filed a motion to strike the judgments for the Yaremas and S & S, arguing their prior settlements exceeded the total damages awarded.
- The trial court ordered the compensatory damage awards for the Yaremas and S & S to be 'deemed satisfied' due to the settlements but refused to strike the punitive damage awards.
- Exxon Corporation, as appellant, appealed the trial court's decision to permit the punitive damage awards to stand to the intermediate appellate court.
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Issue:
Does a plaintiff's prior settlement with other joint tortfeasors, which is large enough to satisfy the compensatory damages later awarded by a jury against a non-settling tortfeasor, also extinguish a separate punitive damage award against that same non-settling tortfeasor?
Opinions:
Majority - Bishop, Judge
No. A settlement with one joint tortfeasor that satisfies a subsequent compensatory damage award does not extinguish a punitive damage award against a non-settling tortfeasor. The court reasoned that the Uniform Contribution Among Tortfeasors Act applies only to compensatory damages, which are based on the joint or common liability of tortfeasors for a single injury to a plaintiff. Punitive damages, in contrast, are not intended to compensate but to punish a specific wrongdoer for their individual culpability and to deter future misconduct. Therefore, they are not part of the 'common liability' that can be reduced by another's settlement. The court also held that the prerequisite for punitive damages—an award of compensatory damages—was met because the jury did, in fact, find that the plaintiffs suffered actual loss and awarded compensatory damages. The subsequent statutory satisfaction of that award for collection purposes does not negate the jury's underlying finding of harm, which is the necessary predicate for a punitive damages award.
Analysis:
This decision solidifies the distinction between compensatory and punitive damages in the context of joint tortfeasors and settlements. It prevents a culpable defendant from escaping punishment simply because a co-defendant settled, reinforcing the deterrent purpose of punitive damages. The ruling also significantly broadens the scope of actionable nuisance in environmental tort cases by holding that a direct physical impact is not a prerequisite for recovery. By recognizing that government-imposed land-use restrictions and the credible threat of contamination constitute a substantial and unreasonable interference with property rights, the court lowered the bar for plaintiffs whose property values and use have been diminished by nearby pollution, even without direct contamination.
