Arabie v. Citgo Petroleum Corp.

• Decision Date: 27 October 2010
• Docket Number: No. 10-244.,10-244.
• Citation: 49 So.3d 529
• Parties: Craig Steven ARABIE, et al. v. CITGO PETROLEUM CORPORATION, et al.
• Court: Court of Appeal of Louisiana — District of US

49 So.3d 529

Craig Steven ARABIE, et al.

v.CITGO PETROLEUM CORPORATION, et al.

No. 10-244.

Court of Appeal of Louisiana,Third Circuit.

Oct. 27, 2010.

M. Dwayne Johnson, Charles S. McCowan, Jr., Kean, Miller, Hawthorne, D'Armond, McCowan & Jarman, L.L.P., Baton Rouge, LA, for Louisiana Chemical Association.

William B. Baggett, Wells Talbot Watson, Baggett, McCall, Burgess, Watson & Gaughan, Richard Elliott Wilson, Cox, Cox, Filo, Camel & Wilson, Lake Charles, LA, Peter J. Butler, Gretna, LA, for Plaintiffs/Appellees, Bennett Talbot, Jason Doucet, Jerry Richard, Jr., John Giovanni, Glen Miller, Dennie Bankston, Charles Hardy, Dexter Breaux, Scott Levy, Craig Steven Arabie, Jimmy Buckelew, Larry Thomas, Joseph Burnett, and Randall Fontenot.

Michael Kenneth Dees, Lake Charles, LA, for Lake Charles Harbor & Terminal District.

Mat Marion Gray, III, E. Stuart Ponder, New Orleans, LA, for Louisiana Surplus Lines Association.

Robert E. Landry, Scofield, Gerard, Singletary & Pohorelsky, L.L.C., Yul Dubart Lorio, Doucet, Lorio & Moreno, Marshall Joseph Simien, Jr., Simien Law Firm, Lake Charles, LA, Richard Edward Sarver, Barrasso, Usdin, Kupperman, Freeman & Sarver, L.L.C., News Orleans, LA, for Defendant/Appellant, Citgo Petroleum Corporation.

Kirk Albert Patrick, III, Law Offices of Donohue Patrick, Baton Rouge, LA, for Defendant/Appellee, R & R Construction, Inc.

Patrick Craig Morrow, Jr., Morrow, Morrow, Ryan & Bassett, Opelousas, LA, for BMF Partnership's, Louisiana Landowner, Rice Farmers, Bradley Zaunbrecher, and Kyle Smith.

Court composed of ULYSSES GENE THIBODEAUX, Chief Judge, OSWALD A. DECUIR, and JAMES T. GENOVESE, Judges.

THIBODEAUX, Chief Judge.

**1 The defendant-appellant, CITGO Petroleum Corporation (CITGO), released wastewater and slop oil from its Lake Charles refinery in 2006 when its wastewater treatment unit (WWTU) overflowed following six inches of rainfall over a three-hour period. Fourteen plaintiffs (the appellees) working down-river of the release site brought suit for damages resulting from exposure to toxic chemicals in the oil and wastewater.

The trial court found CITGO liable and awarded each plaintiff compensatory damages, general damages, and fear of future injury damages. The trial court also assessed litigation costs to CITGO and awarded punitive damages against CITGO in the amount of $30,000.00 per plaintiff. The total damages awarded to each plaintiff did not exceed $50,000.00. CITGO filed this appeal. We affirm the judgment of the trial court.

I.

ISSUES

We must decide:

(1) whether CITGO's actions were the proximate cause of the plaintiffs' injuries;

(2) whether the trial court manifestly erred in awarding damages for fear of future injury;

(3) whether the trial court erred in failing to allocate a portion of the fault to the plaintiffs and to third parties; and,

(4) whether the trial court erred in awarding punitive damages.

**2 II.

FACTS AND PROCEDURAL HISTORY

On June 19, 2006, CITGO released over four million gallons of hazardous slop oil and seventeen million gallons of wastewater into the Calcasieu River from the storm surge storage tanks in the CITGO Refinery's waste water treatment unit (WWTU) in Lake Charles. The WWTU was built in 1994. Its purpose was to treat wastewater from the CITGO Refinery and discharge it into the Calcasieu River. The WWTU contained two ten-million gallon storm tanks which were designed to store untreated water. The tanks were equipped with skimmers to remove oil from the water, but the skimmers had not been functional since shortly after the WWTU was operational. Approximately eight feet of slop oil accumulated underneath the water in the tanks. The tank levels were not drawn down before the storm and flooding leading to the release. The capacity overload of the two tanks during the heavy rainfall in a short period of time caused the tanks to overflow; the dike around the tanks failed; and, CITGO released twenty-one million gallons of oil and wastewater into Calcasieu waterways.

The slop oil, which contains hydrogen sulfide and benzene among other toxic chemicals, ran into the Calcasieu River, affecting approximately one hundred miles of shoreline. Within two days it had migrated to the Ron Williams Construction site where the plaintiffs were working at the riverside location of the Calcasieu Refining Company (CRC). CRC is a small plant that is basically an island, with only one roadway connecting it to land. The plaintiffs' work site was encircled with the mixture. CITGO implemented a two-month clean-up project near and on the CRC work site. Booms used to soak up the oil were deposited in a large dumpster, called a roll-off box, approximately thirty feet from the plaintiffs' lunch and break **3 tent. Plaintiffs also attended daily construction meetings in this area. One of the plaintiffs vomited shortly after arriving at the work site on the first work-day after the release. Some of the plaintiffs working on the dock area at CRC were directly exposed to the water and slop oil and alleged rashes and peeling skin as a result of the exposure. As a result of inhaling the vapors from the chemicals in the slop oil, the plaintiffs alleged respiratory and central nervous system injuries including, but not limited to, headaches, nausea, dizziness, as well as eye, nose, and throat problems.

The fourteen plaintiffs from the Ron Williams Construction site at CRC cumulated their actions and filed suit against CITGO and R & R Construction, Inc. (R & R), in May of 2007. R & R was under contract with CITGO to provide construction services for a new levee system around a third storm water tank being built at the WWTU and was allegedly negligent in building the unit's junction box.

On September 17, 2008, CITGO entered a plea agreement in federal court for "Negligently Discharging a Pollutant froma Point Source into the Navigable Waters of the United States in violation of Title 33 of the United States Code." In the plea agreement, CITGO agreed to pay a criminal fine in the amount of thirteen million dollars in exchange for the Government's agreement to forgo additional criminal prosecution for any other environmental offenses that occurred before the agreement and were known to the Government at the time of the signing of the plea agreement. The offenses specifically included discharges of pollutants, Clean Air Act violations, record keeping violations, and disposal and treatment violations.

On September 19, 2008, the trial court issued two judgments in favor of the plaintiffs, granting them summary judgment on the issues of comparative fault (1) of the plaintiffs, and (2) of their employer, Ron Williams Construction, and the premise owner, CRC.

**4 In March of 2009, CITGO and R & R filed a joint admission of fault for the release of slop oil from the CITGO refinery. In that document, CITGO agreed to "pay (upon final judgment after all appeals) plaintiffs for all their compensatory damages assessed to CITGO and R & R, if any, that plaintiffs are able to prove to the Court were proximately caused by such release from the CITGO refinery in Calcasieu Parish, Louisiana, on or about June 19, 2006."

The plaintiffs amended their suit to include the defendants' liability for punitive damages as well as compensatory damages. They asserted that CITGO's corporate management—headquartered in Tulsa prior to 2004, and in Houston thereafter—made decisions in the early 1990s to intentionally underbuild the 1994 WWTU by deleting a third storage tank from the original project plan in order to save millions of dollars. The engineering for the project design of the third tank was approved in 2004, and the funds for construction were approved in 2005. The plaintiffs further asserted that, due to engineering delays caused by CITGO's corporate management and the priority given to profit-centered projects, the third tank was not under construction until 2006 and was not complete and operational when the flooding and release occurred in June of 2006. The plaintiffs further asserted that, under a conflict of law analysis, the defendants are liable for punitive damages under the punitive damage statutes of Oklahoma and Texas, the two states where the corporate decisions, and thus the damage-causing conduct, occurred.

Following a lengthy trial, the trial court agreed with the plaintiffs and entered judgment on October 22, 2009. CITGO appeals the trial court's judgment on the issues of causation, punitive damages, and costs. CITGO also asserts as error the trial court's failure to allocate portions of the fault to the plaintiffs and their employer, Ron Williams Construction, and to the premise owner, CRC. For the reasons fully **5 set forth below, as to the issues raised by CITGO in this appeal, we affirm the October 22, 2009 judgment of the trial court and the September 19, 2009 judgments on allocation of fault. ¹

III.

LAW AND DISCUSSION

Standard of Review

When an appellate court finds that a reversible error of law was made inthe trial court, it must conduct a de novo review of the entire record and render a judgment on the merits. Rosell v. ESCO, 549 So.2d 840 (La.1989). An appellate court may not set aside a trial court's findings of fact in the absence of manifest error or unless it is clearly wrong. Stobart v. State, Through DOTD, 617 So.2d 880 (La.1993). Regarding factual findings, a two-tiered test must be applied in order to reverse the findings of the trial court: (a) the record reveals that a reasonable factual basis does not exist for the finding of the trial court; and (b) the record establishes that the finding is clearly wrong (manifestly erroneous). Mart v. Hill, 505 So.2d 1120 (La.1987).

Even where the appellate court believes its inferences are more reasonable than the fact finder's, reasonable determinations and inferences of fact should not be disturbed on appeal. Arceneaux v. Domingue, 365 So.2d 1330 (La.1978). Additionally, a reviewing court must keep in mind that if a trial court's...