Exxon Corp. v. Yarema

Decision Date01 September 1986
Docket NumberNo. 143,143
Citation69 Md.App. 124,516 A.2d 990
PartiesEXXON CORPORATION v. John YAREMA, et al. ,
CourtCourt of Special Appeals of Maryland

Lewis A. Noonberg (Jeffrey D. Herschman, John E. Griffith, Jr. and Piper & Marbury, Baltimore, on the brief; Richard P. Delaney and Mark A. Howard, Houston, Tex., of counsel), for appellant.

Brian C. Parker (James A. Smith and Gebhardt & Smith on the brief), Baltimore, for appellees, The Yaremas.

J. Earle Plumhoff (Robert L. Hanley, Jr. and Nolan, Plumhoff & Williams, Chartered on the brief), Towson, for appellees, Ascot Estates, Inc. & Manor Associates.

Michael I. Gilbert, Baltimore, on the brief for appellees, S & S Land Co. and S & S Development Co.

Argued Before MOYLAN, WEANT and BISHOP, JJ.

BISHOP, Judge.




I. Facts ..................................... 994
II. Effect of Settlement on Punitive Damages Award ................................... 995

A. Scope of Uniform Contribution

Among Tortfeasors Act ............... 995

B. Punitive Damages Contingent on

Compensatory Award .................. 997

III. Improper Communication With Jury .......... 999
IV. Physical Impact as Condition Precedent ............................... 1001

A. Nuisance ............................... 1001

B. Negligence and Strict Liability ........ 1005

V. Punitive Damages .......................... 1006

A. The Standard ........................... 1007

B. The Evidence ........................... 1008

C. Conduct Directed Against Particular

Plaintiffs .......................... 1012

VI. Admissability of Testimony Concerning

the Hazardous Effects of Contaminated

Water ................................... 1013 In Jacksonville, Maryland, gasoline leaks developed in storage tanks located at three stations owned respectively by Amoco Oil Company, Gulf Oil Corporation and appellant, Exxon Corporation. The discharged gasoline contaminated the ground water along Jarrettsville Pike and spawned four separate tort suits that involved twenty-seven parties and at least ninety claims. Eventually these cases were consolidated and most claims were settled or dismissed. At the time the trial began, on October 3, 1983, only appellees here, Yarema's Lake, Inc., John E. Yarema, Jr. and Sherrill Yarema (collectively referred to as the "Yaremas"), S & S Land Company and S & S Development Company (collectively "S & S"), Ascot Estates, Inc. and Manor Associates still asserted claims against just two defendants, appellant, Exxon Corporation and its dealer, Patrick Storto. Each plaintiff based recovery upon strict liability, negligence, trespass and nuisance. The trespass actions of the Yaremas and S & S were dismissed on summary judgment by the trial court.

After seven weeks of trial, the jury returned a verdict for Exxon's dealer, Patrick Storto, but found appellant, Exxon Corporation, liable as to every claim except for Manor Associates' nuisance claim. After an untimely appeal was finally resolved in Yarema v. Exxon Corporation, 305 Md 219, 503 A.2d 239 (1986), all cases were remanded to the trial court for disposition of certain open claims.

Because the Yaremas and S & S had previously received settlements from Amoco, Gulf and their dealers which exceeded the total amounts of compensatory and punitive damages awarded by the jury, Exxon moved to strike the judgments against it. The trial court ordered the compensatory awards to be "deemed satisfied" to reflect these payments; however, the court permitted the awards of punitive damages to stand.

The resulting awards against Exxon were:

Compensatory Punitive

Plaintiff Damages Judgment 1 Damages Judgment

----------------- ---------------------- ----------------

Yarema' Lake - $ 20,000.00

Mr. & Mrs. Yarema - $ 20,000.00

S&S - $ 25,000.00

Ascot $140,000.00 $910,000.00

Manor $ 20,000.00 $ 25,000.00

Exxon asks whether the trial court erred:

I. By allowing punitive damages in favor of S & S and the Yaremas, even though these plaintiffs received settlements greater than the jury's total award of both compensatory and punitive damages;

II. When it communicated with the jury out of presence of counsel when discussing the verdict sheet;

III. In denying Exxon's Motions for Judgment as to the plaintiffs whose properties Exxon did not contaminate;

IV. In its rulings as to the standard required for an award of punitive damages; and

V. In allowing testimony concerning the hazardous effects of using contaminated water.


When Exxon built its service station in 1965, it installed three new, carbon steel, underground storage tanks. In March 1979, the operator of the station notified Exxon that the tank which contained premium, unleaded gasoline was losing a significant quantity of gasoline. In response, Exxon evacuated and repaired the corroded tank. Although Exxon knew at the time that at least 1,100 gallons of gasoline had been lost from its tank, it took no immediate remedial measures to recover the gasoline or to prevent the spread of ground water contamination.

Based on inventory shortages amounting to at least 703 gallons, which occurred throughout October and early November 1980, the Exxon operator suspected a second leak, this time in the regular unleaded gasoline storage tank. Although Exxon subsequently contended that this shortfall could have been explained as a "bookkeeping error," it drained and repaired the tank on November 4, 1980. Exxon took no other remedial action at that time.

The following year, in May 1981, Baltimore County became aware of the contamination of the ground water in the Jacksonville area after tests revealed benzene, toluene and xylene in several wells. These toxic chemicals are organic hydrocarbons usually found together in gasoline. Subsequent tests by Exxon indicated the extent to which the ground water contamination had spread to neighboring properties, a fact that Exxon concedes. Because they are not proximately located to the Exxon station, it is uncontroverted that S & S's property and Ascot's office building lot were not contaminated by Exxon leaks. In contrast, tests by Exxon demonstrated conclusively that Exxon's contamination has spread to five of thirteen building lots owned by Ascot as well as the extreme western portion of the Manor Shopping Center property.

With regard to property owned by Yaremas, the issue of contamination remains in dispute. Expert testimony indicated that the Yaremas' property sits on a geological ridge which protects it from contamination originating from the Exxon station. Evidence that Yaremas' property was contaminated, however, was adduced during trial. In October of 1981, the Baltimore County Health Department notified John Yarema that his well water was contaminated. In addition, testimony by a representative of the Baltimore County Health Department as well as the Yaremas' expert witness corroborated the fact of contamination.

Regardless of whether actual contamination had spread to neighboring lands, the Baltimore County Health Department imposed severe land use restrictions, including prohibiting the use of well water and banning the sale of the lots or issuance of building permits for all lots that evidenced contamination or were contiguous to such contaminated lots. Obviously these restrictions were imposed because of the potential and imminent threat that Exxon's ground water contamination posed to the people in the Jacksonville area. There was uncontroverted expert testimony from both sides that the flow of ground water can be directed and accelerated when ground water is pumped from a well. Specifically, the pumping of ground water creates a "cone of depression," which in effect draws the contaminated waters towards the well. Consequently, the normal use of wells increases the danger that uncontaminated well water will soon become contaminated. Moreover, Exxon's evidence demonstrates that the threat of contamination spreading to neighboring property is substantial. At the time of trial, Exxon's own evidence demonstrated that its ground water contamination is not receding, but in fact spreading.

In their suits, appellees sought compensatory and punitive damages resulting from Exxon's alleged tortious interference with the use and enjoyment of their properties.

II. Effect of Settlement on Award of Punitive Damages

Before the jury rendered verdicts in their favor, the Yaremas and S & S received substantial amounts from other defendants, which were at least as great as the subsequent total verdicts, including both compensatory and punitive damages. Pursuant to the Uniform Contribution Among Tortfeasors Act, Maryland Ann.Code art. 50, § 19 (1979), the trial court ordered that the award for compensatory damages be deemed satisfied. 2

Appellant Exxon argues, on two grounds, that the court erred by permitting the awards for punitive damages to stand. First, Exxon asserts that section 19 of the Uniform Contribution Among Tortfeasors Act should be extended to include punitive damage awards. Exxon argues that since the settlement amounts the Yaremas and S & S received were at least as great as their total awards for compensatory and punitive damages, the punitive damage awards should be reduced to zero. Second, Exxon contends that the award of punitive damages is contingent upon entitlement to compensatory damages. Since the court determined that the Yaremas' and S & S's compensatory damages awards were satisfied fully by their settlements, no recovery of punitive damages is possible. On both points we find Exxon's arguments unpersuasive.


Scope of Uniform Contribution Among Tortfeasors Act

Citing Martinez v. Lopez, 300 Md. 91, 476 A.2d 197 (1984), Exxon argues that the Uniform Contribution Among Tortfeasors Act requires that the settlements of Exxon's co-defendants should reduce the punitive damage awards to zero. Section 19 of the Act provides:

A release by the injured person of one joint tort feasor,...

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